

Currently released so far... 12900 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
2011/05/01
2011/05/02
2011/05/03
2011/05/04
2011/05/05
2011/05/06
2011/05/07
2011/05/08
2011/05/09
2011/05/10
2011/05/11
2011/05/12
2011/05/13
2011/05/14
2011/05/15
2011/05/16
2011/05/17
2011/05/18
2011/05/19
2011/05/20
2011/05/21
2011/05/22
2011/05/23
2011/05/24
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Consulate Karachi
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sapporo
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
AE
ASEC
AS
AR
AMGT
AFIN
AORC
AU
AG
AF
APER
ABLD
ADCO
ABUD
AM
AID
AJ
AEMR
AMED
AL
ASUP
AN
AIT
ACOA
ANET
ASIG
AA
AGMT
AINF
AFFAIRS
ADANA
AY
AADP
ARF
ACS
AGR
AMCHAMS
AECL
AUC
APEC
APECO
AFGHANISTAN
ACAO
ASEAN
ADM
AGAO
AND
ADPM
ATRN
ALOW
AROC
APCS
AORG
AO
AODE
ACABQ
AX
AMEX
AZ
ARM
AQ
ATFN
AMBASSADOR
ACBAQ
AFSI
AFSN
AC
ASEX
AER
AVERY
AGRICULTURE
ASCH
AFU
AMG
ATPDEA
ASECKFRDCVISKIRFPHUMSMIGEG
AORL
BR
BO
BA
BM
BL
BH
BK
BEXP
BILAT
BTIO
BF
BU
BD
BY
BE
BG
BB
BBSR
BT
BRUSSELS
BP
BX
BC
BIDEN
BMGT
BWC
BN
BTIU
CA
CS
CO
CD
CR
CPAS
CDG
CI
CDC
CBW
CU
CVIS
CE
CONS
CH
CMGT
CASC
CY
CW
CG
CJAN
CIDA
CODEL
CWC
CIA
CBSA
CEUDA
CFED
CLINTON
CAC
CL
CACS
CIC
CHR
CAPC
CM
CT
CTR
COM
CROS
CN
COPUOS
CV
CF
CARSON
CONDOLEEZZA
CICTE
CYPRUS
COUNTER
COUNTRY
CBE
CKGR
CVR
COUNTERTERRORISM
CITEL
CLEARANCE
COE
CARICOM
CB
CSW
CITT
CACM
CDB
CJUS
CTM
CAN
CLMT
CBC
CNARC
CIS
EFIN
ECON
ETRD
EAID
EC
EU
EUN
EINV
EG
ETTC
EIND
ELAB
EAGR
ECIN
EINT
ENRG
EFIS
ELTN
EAIR
EPET
EZ
ET
ENERG
ECPS
EWWT
EI
ETRN
EINVECONSENVCSJA
EEPET
EUNCH
ER
ES
EN
EMIN
ESENV
ENNP
ENGR
ETRDEINVECINPGOVCS
ENVI
ECINECONCS
ELN
EFTA
ELECTIONS
ENVR
EXTERNAL
ENIV
ESA
EPA
ETRO
ETRDECONWTOCS
EUR
ECUN
EXIM
EK
EUREM
ECONOMY
EUMEM
ERNG
EFINECONCS
EAIDS
ECA
ETRC
EINVEFIN
ETC
EAP
EINN
ECONOMIC
EXBS
ENGY
ECONOMICS
EIAR
EINDETRD
ECONEFIN
EURN
EDU
ETRDEINVTINTCS
ECIP
EFIM
EREL
EINVETC
ECONCS
ETRA
EAIG
EUC
ERD
IQ
IR
IS
IN
IA
IC
IZ
ICRC
ID
IDA
IT
IO
IAEA
ICJ
ICAO
IV
IBRD
IMF
IAHRC
IWC
ILO
ISLAMISTS
IGAD
ILC
ITU
ITF
INRA
INRO
ICTY
INRB
ITALY
IBET
IL
INTELSAT
ISRAELI
IMO
IDP
ICTR
ITRA
IRC
IRAQI
IEFIN
IPR
IIP
INMARSAT
ITPGOV
ITALIAN
INTERNAL
IRS
INTERPOL
IEA
INR
ISRAEL
IZPREL
IRAJ
IF
ITPHUM
IACI
INDO
KPAO
KMDR
KCOR
KNNP
KJUS
KCRM
KDEM
KVPR
KTFN
KPRP
KTIP
KSCA
KSUM
KTEX
KIDE
KIRF
KV
KTIA
KN
KG
KFRD
KWMN
KUNR
KISL
KU
KGHG
KPKO
KOMS
KPAL
KIPR
KMCA
KOMC
KRVC
KSEP
KAWC
KOLY
KWBG
KACT
KFLO
KHIV
KZ
KGIC
KBCT
KDRG
KBTR
KCFE
KE
KHLS
KMPI
KAWK
KPWR
KIRC
KRAD
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KFLU
KPLS
KRIM
KSTH
KDDG
KPRV
KICC
KS
KSAF
KBIO
KREC
KCGC
KCIP
KTDB
KWAC
KPAI
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KFSC
KSTC
KMFO
KID
KNAR
KMIG
KVRP
KNEI
KGIT
KNSD
KHDP
KSAC
KWMM
KR
KCOM
KAID
KENV
KVIR
KHSA
KO
KCRS
KPOA
KTER
KFIN
KSPR
KTBT
KX
KCMR
KMOC
KCRCM
KBTS
KSEO
KOCI
KNUP
KPAONZ
KNUC
KNNPMNUC
KERG
KSCI
KTLA
KCSY
KTRD
KMRS
KNPP
KJUST
KRCM
KCFC
KCHG
KREL
KFTFN
KLIG
KDEMAF
KGCC
KICA
KHUM
KSEC
KPIN
KESS
KDEV
KPIR
KWWMN
KOM
KWNM
KRFD
KRGY
KIFR
KWMNCS
KPAK
MARR
MOPS
MUCN
MCAP
MNUC
MEPP
MTCRE
MASS
MO
MIL
MX
MAS
MEDIA
MAR
MI
MQADHAFI
MPOS
MTCR
MK
MG
MA
MY
MU
ML
MPS
MW
MD
MARAD
MC
MR
MT
MTRE
MASC
MRCRE
MAPP
MZ
MP
MOPPS
MTS
MLS
MILI
MEPN
MEPI
MEETINGS
MERCOSUR
MCC
MIK
MAPS
MV
MILITARY
MDC
MASSMNUC
NI
NZ
NL
NO
NPT
NATO
NS
NU
NP
NPA
NSFO
NDP
NT
NW
NASA
NSG
NE
NORAD
NAFTA
NG
NATIONAL
NSSP
NV
NSF
NK
NA
NEW
NPG
NR
NGO
NIPP
NZUS
NH
NC
NRR
NAR
NATOPREL
NSC
OIIP
OPRC
OTRA
OEXC
OREP
OSCE
OVIP
OPAD
OBSP
OECD
OFFICIALS
OAS
OPDC
ODIP
OPCW
OES
OFDP
OPIC
OCS
OIC
OHUM
OSCI
OVP
ODC
OIE
OTR
OMIG
OSAC
OFDA
ON
OCII
PREL
PINR
PGOV
PARM
PE
PTER
PHUM
PO
PINS
PREF
PK
PM
POL
PBTS
PNAT
PHSA
PAS
PA
PL
PGIV
PHUMPREL
POGOV
PAK
PEL
PROP
PP
PINL
PBT
PTBS
PG
PINF
PRL
PALESTINIAN
PSEPC
POSTS
PAHO
PHUMPGOV
PGOC
PNR
PREFA
PMIL
POLITICS
POLICY
PROV
PBIO
PREO
PAO
PDOV
PGOF
POV
PCI
PRAM
PSI
POLITICAL
PAIGH
PJUS
PARMS
PROG
PTERE
PRGOV
PORG
PS
PKFK
PSOE
PEPR
PPA
PINT
PMAR
PRELP
PNG
PFOR
PUNE
PGOVLO
PHUMBA
POLINT
PGOVE
PHALANAGE
PARTY
PDEM
PECON
PY
PLN
PHUH
PF
PHUS
PU
PARTIES
PCUL
PGGV
PSA
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
RU
RS
REGION
REACTION
REPORT
RO
RW
RCMP
RSO
RP
RM
ROOD
RFE
RICE
ROBERT
RSP
RF
RELATIONS
RIGHTS
RIGHTSPOLMIL
RUPREL
SENV
SY
SNAR
SCUL
SP
SF
SW
SOCI
SU
SMIG
SO
SA
SR
SZ
SI
SC
SEVN
SN
STEINBERG
SK
SH
SNARCS
SPCE
SARS
SNARN
SG
SL
SYRIA
SIPRS
SAARC
SNARIZ
SWE
SYR
SEN
SCRS
SAN
ST
SIPDIS
SSA
SPCVIS
SOFA
SENVKGHG
SANC
SHI
SHUM
TU
TSPA
TBIO
TS
TRGY
TINT
TPHY
TN
TW
TH
TZ
TSPL
TP
TBID
TI
TF
TD
TT
TNGD
TL
TC
THPY
TIP
TX
TV
TK
TERRORISM
TO
TRSY
TURKEY
TFIN
TAGS
TR
UK
UNSC
UNGA
UNESCO
UNHRC
UP
UN
USTR
US
UNDC
UY
UNICEF
UNDP
UNMIK
UNAUS
UNCHC
UNCSD
USOAS
UNFCYP
UG
UNIDROIT
UNO
UV
UNHCR
UNEP
USEU
UZ
UNCND
USUN
UNCHR
USNC
USPS
USAID
UE
UNVIE
UAE
UNODC
UNCHS
UNFICYP
UNDESCO
UNC
UNPUOS
Browse by classification
Community resources
courage is contagious
Viewing cable 09LONDON2002, SCENESETTER FOR SEPTEMBER 3-6 VISIT OF CODEL SHELBY TO THE
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #09LONDON2002.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09LONDON2002 | 2009-08-28 07:14 | 2011-02-04 21:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy London |
VZCZCXRO3389
PP RUEHBL RUEHED
DE RUEHLO #2002/01 2400714
ZNR UUUUU ZZH
P 280714Z AUG 09 ZDK
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 3321
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBL/AMCONSUL BELFAST PRIORITY 1398
RUEHED/AMCONSUL EDINBURGH PRIORITY 1194
UNCLAS SECTION 01 OF 03 LONDON 002002
H For CODEL SHELBY
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: OTRA OVIP ECON UK
SUBJECT: SCENESETTER FOR SEPTEMBER 3-6 VISIT OF CODEL SHELBY TO THE
UNITED KINGDOM
LONDON 00002002 001.3 OF 003
¶1. (SBU) The UK government is eager to share viewpoints on financial services reform, and to ensure that U.S. and UK regulations complement each other with the goal of ensuring a vital and thriving financial services industry - critical to both our countries' economic recovery and growth. (Post has separately sent the schedule, along with biographies to military aide and to the chief of staff to Senator Shelby.)
¶2. (SBU) UK government officials are concerned about economic recovery and are questioning whether recent positive signs in the U.S. and Europe indicate that the worst is over. The Labour and Conservative Parties have recently released white papers outlining their vision for UK regulatory architecture. Labour would give the Financial Services Authority (FSA) a formal, statutory objective for financial stability. The Conservatives plan to abolish the FSA and centralize banking regulation authorities in the Bank of England while creating a separate Consumer Protection Agency.
¶3. (SBU) The Financial Services Authority, the Treasury Select Committee and the bankers are concerned about actions in Brussels. The UK is concerned that regulations originating in Brussels would, perhaps as an unintended consequence, most adversely affect the UK. They point to the draft hedge fund directive; the bankers are also concerned about moves to regulate pay and bonuses. Internationally, the UK is pushing for an agreed mechanism for resolving failed multinational banks.
Overview of UK Economy ----------------------
¶4. (U) The UK officially entered recession in the third quarter of 2008 and has suffered a cumulative contraction of 5.7 percent over the last five quarters. In July, the IMF forecasted contraction of 4.2 percent in 2009 and growth of 0.2 percent in 2010. The OECD projected UK output would decline by 4.3 percent in 2009 and would see zero growth in 2010. HM Treasury expects a contraction of 3.5 percent in 2009 and growth of 1.25 percent in 2010. Unemployment stands at 7.8 percent, its highest since 1995, and is expected to climb to more than 10 percent in early 2010. Unemployment is particularly acute among 18-to-24 year olds at 17 percent. The economic downturn is taking a heavy toll on trade. According to U.S Commerce Department and US International Trade Commission monthly trade statistics, U.S. goods exports to the UK declined by 21.7 percent from Jan. to June 2009, compared to the same period in 2008, and UK exports to the US declined by 25.6 percent.
¶5. (U) Credit conditions are easing. The Bank of England's latest Credit Conditions Survey found lending to the corporate sector increased during the second quarter of this year, as did the availability of secured credit to households. Small businesses and homeowners, however, still find it difficult to find financing at reasonable rates. Chancellor of the Exchequer Alistair Darling called together CEOs of major banks on August 8 to criticize them for not passing on the lower rates to customers and not increasing their lending.
¶6. (U) Public debt stands at GBP 800 billion, at 56.8 percent of GDP, its highest level since records began in 1974, up from 56.6 percent last month. However, UK debt as a percentage of GDP is still lower than the same percentage in the other G7 countries. CPI inflation was stronger than expected in July, remaining at 1.8 percent. Consumer confidence is up one point since June and up 11 points since July 2008.
UK Government Actions to Address the Crisis -------------------------------------------
¶7. (U) The UK Government (HMG) has responded to the financial crisis with a three-step plan: bank recapitalization, monetary and fiscal stimulus, and credit stimulus.
¶8. (U) Bank Capitalization: In October 2008, Chancellor Darling provided a GBP 50 billion capital injection into 8 UK banks and the largest building society (Abbey, Barclays, HBOS, HSBC, Lloyds, Nationwide Building Society, Royal Bank of Scotland -RBS - and Standard Chartered). HMG also invested GBP 34 billion in RBS, Lloyds and HBOS. In January, HMG converted its equity stake in RBS from preferred to ordinary shares, increasing its stake in the bank to 70 percent. In recent weeks, HSBC PLC, Lloyds Banking Group PLC, Royal Bank of Scotland PLC and Barclays PLC all reported profits in their retail divisions for the first six months of 2009. Since October 2008, the Bank of England's (BOE's) Monetary Policy Committee has cut the UK's benchmark interest rate 450 basis points from 5 percent to 0.5 percent, the lowest in its 315-year history.
¶9. (U) In November 2008, HMG announced a GBP 20 billion stimulus package including a reduction in value-added tax (VAT) from 17.5 LONDON 00002002 002 OF 003 percent to 15 percent for one year, expected to put GBP 12.4 billion into the economy. HMG also introduced a Homeowners Mortgage Support Scheme and a GBP 200 million Mortgage Rescue Scheme. In May, HMG introduced a scrappage scheme giving GBP 2,000 towards a new vehicle if sellers trade in a car over 10 years old. The VAT cut was criticized for having little effect on sales, the homeowner schemes have helped few because of a lengthy qualification processes, but the car scrappage scheme has been praised for kick-starting the UK's automotive industry.
¶10. (U) In January, to improve access to wholesale funding markets, HMG offered full or partial guarantees to eligible AAA-rated asset backed securities. HMG also extended the drawdown window of its existing credit guarantee scheme (a GBP 150 billion scheme to provide banks with a guaranteed source of funding) from April 9 to December 31. To increase the availability of corporate credit, the Bank of England established an asset purchase scheme to buy high quality assets financed by the issue of Treasury bills. To date, the Bank has purchased GBP 129 billion of assets (primarily gilts) as part of its quantitative easing program, and it is authorized to buy up to GBP 175 billion. The Bank of England also extended its Discount Window Facility, increasing the maximum length of time for asset swaps from 30 days to one year.
¶11. (U) HMG announced an asset protection scheme February 26 to remove uncertainty about the value of banks' past investments, to clean up balance sheets and increase lending in the economy. The scheme provides protection against future losses on banks' riskiest assets, so that the healthier core of their commercial business can continue to lend. Under the scheme, banks pay a fee to have part of their riskier assets protected. If these risky assets result in a loss to the bank, the bank suffers all losses up to a pre-determined amount (called a "first loss"). If losses exceed this "first loss," HMG agrees to cover 90 percent of remaining losses, while the bank is responsible for the balance. In this way, banks retain a portion of the risky asset, but are not dragged down by risky toxic assets of unknown value which may result in a significant, undetermined loss. In return, banks are required to develop a sustainable, long-term pay and bonus policy, consistent with the Financial Services Authority's Code of Practice. To date, the Royal Bank of Scotland (RBS) and Lloyds Banking Group have entered into deals with HMG.
Financial Services Oversight - HM Treasury's Proposal --------------------------- -------------------------
¶12. (U) HM Treasury (HMT) published its white paper on reforming financial markets July 8. HMT plans to give the Financial Services Authority (FSA) a formal, statutory objective for financial stability. The shape of the UK's institutional regulatory framework will remain unchanged but HMG will legislate to create a Council for Financial Stability, to be chaired by the Chancellor of the Exchequer.
¶13. (U) The white paper also recommends increasing the quality and quantity of capital held by banks, increasing capital requirements for riskier trading activities, introducing a backstop "leverage ratio" that ensures minimum capital levels are maintained, and increasing liquidity regulation. The FSA will increase the intensity of its supervision of banks through its Supervisory Enhancement Program (SEP), including increased regulatory resources and greater focus on high impact firms. HMT supported the FSA's work on reducing the incentives created for excessive risk-taking by bank compensation structures. The FSA published a code of practice designed to ensure boards implement a remuneration policy consistent with good risk management. The FSA expects two-thirds of bonuses for senior employees to be spread over three years and calls on firms not to guarantee bonuses for individuals for more than one year. Non-compliant firms could face enforcement action or be forced to hold additional capital. Firms are expected to provide the FSA with a pay policy statement by the end of October and the code will take effect from January 2010.
¶14. (U) The white paper outlined a number of other regulatory reforms. HMT will extend the powers of the FSA by providing it with a formal, statutory objective for financial stability and giving it legal authority to set rules to protect wider financial stability. The FSA will be given extended powers to deal with individual institutions through firm-specific interventions and will receive enhanced enforcement powers to deal with market misconduct.
Conservative Party Proposals on Regulation ------------------------------------------
¶15. (U) Shadow Chancellor George Osborne on July 20 announced the Conservative party proposals for changes to the UK's financial regulatory system. A Conservative government would abolish the UK's LONDON 00002002 003.3 OF 003 tripartite framework and replace it with a significantly more powerful Bank of England (BOE) and a Consumer Protection Agency (CPA). The BOE would be given responsibility for maintaining financial stability, including the micro-prudential regulation of all significant financial institutions. A new Financial Policy Committee within the Bank would monitor systemic risks. The BOE would be given powers to ensure capital and liquidity requirements account for the riskiness of institutions and would oversee the creation of "living wills" to assist with any wind-downs. The Tories would merge the responsibilities for consumer protection of the Financial Services Authority and the Office of Fair Trading to form a new Consumer Protection Agency (CPA).
SUSMAN
...