The regulation of financial conglomerates
| Pages | 215-221 |
| Date | 01 March 1997 |
| DOI | https://doi.org/10.1108/eb024929 |
| Published date | 01 March 1997 |
| Author | Gareth Adams |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 5 Number 3
The regulation
of
financial conglomerates
Gareth Adams
Received
(in
revised form): 23rd May, 1997
Fidelity Investments, Oakhill House, 130 Tonbridge Road, Hildenborough, Tonbridge, Kent TN11
9DZ; tel: 01732 777 144; fax: 01732 777 689.
Gareth Adams
is
Director
of
Compliance,
Fidelity Investments. After obtaining
a BA
in English language
and
literature
at St
Edmund Hall, Oxford, Gareth joined Binder
Hamlyn where
he
trained
as a
Chartered
Accountant until becoming
an ACA in
1986. After leaving Binder Hamlyn
he
spent some time with Baring Brothers
&
Co. before joining IMRO
in
1987. Leaving
IMRO
as a
senior manager
he
joined
the
Hong Kong
and
Shanghai Banking
Cor-
poration
in
London
and,
following
its
acquisition
of
Midland Bank, became
Global Compliance Co-ordinator
for
HSBC
Holdings
plc.
Latterly,
he
became Head
of
Compliance
at
Midland Bank before join-
ing Fidelity Investments
as
Director
of
Compliance
in
June 1996.
ABSTRACT
This paper
considers
the
obstacles
to the regula-
tion
of
financial conglomerates
and the
events
that have shaped thinking
at the
regulators,
in
particular
in the
banking context.
In the
light
of the Barings
debacle
in
particular
it
identifies
some of the issues that such financial institutions
raise
for
financial systems
and the
authorities,
concluding with the challenges faced
by
national
regulators
in an
increasingly
global environment
and what needs
to
be
put
in place
to
meet those
challenges.
INTRODUCTION
The financial supervision
of
such conglom-
erates
has
long been
a
matter
of
debate.
It
has fuelled well over
a
decade
of
discussion
between regulators around
the
world
and a
number
of
very significant steps have been
taken. During that time regulators
and
supervisors have
had not
only
to
address
the theory
of
what
to do
should
a
large
conglomerate, operating
in a
number
of
different jurisdictions, fail,
but
have
had
several live case studies
to
deal with
the
most recent being
Barings.1
The Treasury Committee Report
on
Barings2 addresses with reasonable vigour
the issues that surround the collapse
of
Bar-
ings Bank.
It
covered
a
great deal
of
ground
and
expressed
a
strong sense
of
dis-
appointment, perhaps best epitomised
by
its closing section:
'The evidence suggests that
the new
culture
of
supervision
did not
apply
in
the case
of
Barings
and we are
concerned
that
the
laudable aims
the
Bank
[of
England] currently outlines
may
similarly fall
by the
wayside.
The
Governor observed that
it had
been
noted "that this was
a
case where
we
had
relied
on the
relationship
of
trust that
existed,
or
believed
to
exist,
for too
long
and
we had not
been rigorous enough
in
changing gear".
He was not,
however,
referring
to
Barings
but to
BCCF.3
Much
of
the report
by the
Board
of
Bank-
ing Supervision4
in the
wake
of
Barings
looked
at the
financial supervisory aspect
Journal
of
Financial Regulation
and Compliance, Vol.
5,
No.
3,
1997, pp. 215-221
© Henry Stewart Publications,
1358-1988
Page 215
To continue reading
Request your trial