London: Britain will announce a broader-than-expected review into the banking industry on Monday, looking at culture and standards as well as the causes of an interest rate-fixing scandal, a source familiar with the situation said.
The government has come under increasing pressure to take a closer look at the sector which has felt the full force of public anger since taxpayers bailed out several banks during the 2008-9 financial crisis.
That pressure intensified last week after Barclays was fined for attempting to manipulate the London Interbank Offered Rate (Libor), used worldwide as a benchmark for prices on about $350 trillion (Dh1,285.24 trillion) of derivatives and other financial products.
The opposition Labour Party has threatened to trigger a vote in parliament on whether there should be a full-blown, judge-led inquiry into the banking sector’s excesses, culture and blunders.
The UK source said the investigation, to be unveiled by finance minister George Osborne at around 1530 GMT, would be “wider than a narrow review into Libor and criminal sanctions ... (and) will encompass culture and sanctions.”
However, it is unclear whether the government has any appetite for a wholesale inquiry into the banking sector, as it could make its own planned overhaul of the industry’s current regulatory regime look inadequate.
While it is politically expedient to ‘bash the bankers’, the Conservative-led government will also be wary of wildly attacking a crucial sector in Britain’s economy which is still struggling to function properly after the credit crunch.
Labour leader Ed Miliband has called on Barclays Chief Executive Bob Diamond to resign after the bank’s involvement in the interest rate-fixing scandal.
That case is expected to be just the tip of the iceberg, with several other banks under scrutiny for trying to manipulate Libor.
Barclays Chairman Marcus Agius fell on his sword in an effort to stem the scandal, but critics say that is not enough and that the whole industry needs to change.
“I want to see a new code of conduct for bankers, there is no proper professional code for bankers. For all we know, some of the people who were part of this scandal might still be working in other banks,” Miliband told ITV on Monday.
“There also needs to be that full inquiry, that full public inquiry into exactly what has happened throughout our banking industry.”