So the Bank of England is going to keep an eye on the City and the FSA is going to champion the rights of the consumer. So that’s all sorted then. Well… er, not quite. Who is going to be looking after all the elements that matter most to the treasurer community?
Who for instance will be looking after the regulation of over the counter markets and the work of the ratings agencies? If the economy is going to return to growth it is corporates which will be in the van. And at the moment the needs of the non-financial corporate sector are in danger of being elbowed aside. Their concerns could be
forgotten as politicians seek to restore stability to a delicate banking system, while protecting the deposits of individual savers, who of course matter much more than big business in terms of headlines in national newspapers.
Vince Cable, the business secretary, re-iterated the need to ensure that the banking sector was fulfilling its basic remit by extending credit to business, but he principally had in mind small and medium sized enterprises. Maybe the evidence of the last couple of years that large corporates have managed to look after themselves through the financial crisis and the economic downturn has convinced all the stakeholders – including the big corporates themselves –that there will always be some type of credit for them somewhere out there. But surely after all we’ve been through no-one is going to go anywhere near complacency, especially with the wall of refinancing that is just around the corner.
Non-financial corporates are going to have to put up with a sustained period of uncertainty as we all work out what the changes laid out by the coalition government will mean in practice.
There are some encouraging signs. Corporate treasurers in particular should welcome the fact that Hector Sants has been persuaded to move across from the FSA to the Bank. As a member of the advisory board to the ACT, he is well aware of the requirements that treasurers and corporates have of the banking sector. The report of the ACT 2009 Spring Paper which he gave over 12 months ago is worth a re-read (see The Treasurer June 2009, page 32). With all the activity that the new Chancellor and his team have put in train, the key questions that emerged from that paper still seem as pertinent as ever. The debate that evening after Sants’ speech confirmed the view that society, the economy and treasurers all want and need a robust and successful banking system. Treasurers will be watching anxiously over the coming months to see whether the reforms put forward by politicians work for them. As Cable told the ACT annual dinner in November 2009, perhaps not really expecting he’d be a government minister within a few months: "There are a lot of companies that will help the economy recover, provided that we – as politicians – let it happen."
Peter Williams
Editor
The full text of Hector Sants’ speech can be read at:
http://tinyurl.com/3xrng69
