LONDON, Sept 2, (RTRS): Barclays and other leading British banks have launched a last-ditch lobbying effort with the British government to try and fend off proposals to ringfence their retail operations, sources with knowledge of the matter said.
Sources said it was likely that the banks’ top executives would seek talks with British Finance Minister George Osborne ahead of the Sept 12 publication of a report from a government-appointed commission that will propose tough new regulations and restructuring for the industry.
“We have a major report coming out that will have huge implications for the industry. Wouldn’t you expect the Chancellor to be in touch with the industry?” said one banking industry source.
Asked to comment on the situation, a spokesman for the Treasury replied: “The Chancellor meets with a range of banks and financial services leaders on an ongoing basis.”

Barclays declined to comment.
The Independent Commission on Banking’s (ICB) findings on Sept 12. are set to back proposals made in an earlier interim report to ringfence banks’ retail arms from riskier trading operations to protect taxpayers from future financial crises.
However, Britain’s “Big Four” banks — Barclays, HSBC and part-nationalised lenders Royal Bank of Scotland and Lloyds — have consistently warned that excessively tough regulation could harm the UK economy.
The ringfencing approach would get banks to form separate subsidiaries for different retail and investment banking operations while keeping the same parent holding company.
The ICB has also asked banks to hold more capital — targeting core Tier 1 capital of 10 percent of risk-weighted assets — and the overall impact of the reforms is expected to hit banks’ profits, which could make it harder for them to lend to businesses.
Earlier this week, the British Bankers Association (BBA) called for a delay to the ICB reforms.
“Ringfencing becomes unattractive to investors of all types as it reduces the benefits of diversification, gives borrowers a worse deal, and is inefficient from a capital, funding and operational perspective,” said BBA head Angela Knight.
The ICB has said it expects the industry-wide costs of its interim proposals to be well below £12 billion, while analysts say the industry would face a hit of about £10 billion ($16 billion) a year, with Barclays and RBS most at risk.
Britain set up the ICB after its banks got badly burnt during the 2007-2008 credit crisis.
The government had to fully nationalise Northern Rock and ended up with stakes of 83 percent in RBS and 41 percent in Lloyds after having to rescue RBS and Lloyds with billions of pounds of taxpayers’ money.
Shares in Britain’s beaten-down bank stocks rose sharply on Thursday on hopes that reforms might be delayed, but those stocks slipped back on Friday.
Lloyds and Barclays fell by 4 percent, RBS declined by 2.8 percent, and HSBC fell 2 percent in mid-morning trade, amid a growing sense that some form of restructuring is inevitable.
The ICB’s proposed reforms could take years to implement.
After the final ICB report is issued, it will be up to the government — through a Cabinet committee on banking chaired by finance minister George Osborne — to choose what to implement into law, probably starting later this year or early in 2012.

British media reports this week said reforms may not come in until after the planned 2015 general election, while Britain would not want to be out of step with the 2013 introduction of tougher global bank capital and liquidity standards, known as Basel III.
However, politicians will be keen to ensure that the general public does not think that they have let the industry off the hook by watering down the ICB’s proposals.
“They see the politicians bashing the banks and think they are doing a good job; but when they see them backing off the banks, they wonder if they are being paid off and in thrall to big business,” said Roger Mortimore, director of political analysis at polling firm Ipsos Mori.
“It’s something the public think very strongly about, even though they don’t understand the ins and outs of the reforms or the way banks work ... but they do have this strong feeling the banks have misbehaved,” he added.
British Prime Minister David Cameron said on Friday that it remained vital to tackle elements of irresponsible behaviour in the banking industry.
Former Labour finance minister Alistair Darling will also say in his forthcoming memoirs that bank chiefs at the heart of the financial crisis were “so arrogant and stupid that they might bring us all down.”