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Regulatory Delays in U.K. Changes Options for Firms

September 1, 2011
The British government will announce that it has postponed plans to require U.K.-based banks and financial institutions to restructure - a decision that's likely to keep Barclays' from moving its headquarters away from London.  According to the Financial Times, this would mean that British banks will escape restructuring until after the planned 2015 general election. Following these reports, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc rose sharply in U.K. markets, while Barclays is a top financial performer in the U.S. markets. It's become apparent that U.K. officials - notably Business Secretary Vince Cable - have started to moderate their positions.  Mr. Cable has been one of the more "vocal critics of banks and has been making some of the more aggressive recommendations ..." Back in April, it was recommended that U.K.’s biggest banks should boost capital, introduce plans for an orderly bankruptcy and erect firewalls around consumer units to boost financial stability.  Those proposals, if they had been accepted, were to be unveiled on 9/12/11, and implemented over a lengthy period.  Analysts anticipated that the new rules would lead to higher costs in the short term.  But now, "the ability to have more time to get the balance sheet into the right place is likely to lead to lower restructuring costs to get there," analysts said.  [Bloomberg, 9/1/11]