Turning City of London into the 'Wild West' would be self-defeating, says BoE's Woods

FILE PHOTO: People walk outside the Bank of England in London

By Huw Jones

LONDON (Reuters) -Turning the City - London's financial district - into a "Wild West" to attract more business after Brexit would be self-defeating as maintaining financial stability is key to competitiveness, Bank of England Deputy Governor Sam Woods said on Thursday.

Britain's parliament is approving a new financial services bill giving regulators an extra objective to aid the City's global competitiveness after losing some market share and staff to the European Union since Brexit.

Woods said in a speech to be delivered to the annual City Dinner that financial stability is the single most important ingredient of competitiveness in the sector.

There was a good case for regulators to place more weight on growth and competitiveness as part of post-Brexit reforms, but there were good and bad ways of making this change, Woods said.

"The UK's reputation for robust, independent and open regulation is a hard-won asset, and it is a vital part of what makes the City an unparalleled global success story," Woods said.

"Any attempt to become a global financial centre by competitively de-regulating would be self-defeating by its nature: major international financial institutions want a safe harbour, not a Wild West."

City Minister Andrew Griffith said earlier this month he would introduce into the financial services bill a new power which allows the finance ministry to intervene in rulemaking by regulators, though the exact wording has yet to be published.

"We do not know exactly what this power will look like, but a power which allowed ministers to override regulatory decisions just because they took a different view of the issues involved would represent a significant shift away from a model of independent regulation," Woods said.


Britain is set to scrap the cap on banker bonuses inherited from the EU, and Woods said he was now looking more broadly at the whole structure of banker remuneration standards.

Going back to the pre-financial crisis system of "cash-out at year-end" approach is a non-starter, Woods said.

"But in the context of our competitiveness as an international financial centre I think it’s also sensible for us to take another look at the set of rules in this area, with more of a global view now that we are out of the EU," Woods said.

Woods has clashed with an insurance industry that wants him to go further in easing capital rules to help it invest in infrastructure.

"We hope to be able to publish a revised assessment very shortly," Woods said of the reform.

The Bank has put forward a simpler capital regime for small banks and will consider a similar regime for mid-tier lenders, Woods said.

A "comprehensive" public consultation paper on introducing the final leg of global bank capital rules, known as Basel 3.1, will be published by the end of the year, he added.

(Reporting by Huw Jones; Editing by Toby Chopra)