Society needs assurances from British banks that a financial collapse will never happen again, the chairman of the City regulator has warned.
In an interview with The Sunday Telegraph, Lord Adair Turner, the chairman of the Financial Services Authority (FSA), said there was more regulation ahead.
But Lord Turner added that work to resolve how banks could fail without bringing down the whole sector and needing taxpayers’ money was still ongoing.
Elsewhere in the banking industry, it emerged City analysts are expecting Britain’s top four banks to unveil a 13% or £2.5 billion jump in their combined profits to £24 billion year-on-year in a sign the sector is on the mend.
At the World Economic Forum in Davos, Lord Turner told The Sunday Telegraph that threats that London’s banks would move to Singapore or Hong Kong because of over-regulation in the UK were a “fantasy”.
He said: “I think the idea that people are going to go off to Hong Kong or Singapore or Brazil to escape our capital and liquidity regimes is a complete fantasy.
“I think the industry needs to recognise that society wants to be assured that measures that have been taken are robust enough to prevent this terrible crisis ever happening again.”
Lord Turner called for a push for more regulation in the so-called shadow banking sector – such as investment banks and hedge funds – after fears were raised over banks’ more risky activities.
Pressure on the banking sector continues to rise as senior politicians call for restraint on bonuses and a Government-commissioned inquiry said moves to split retail and investment banking operations were being considered.
Meanwhile, analysts at investment bank Nomura forecast a strong improvement in British banks’ performance compared with 2009.