ONE of the UK's largest banks should be recapitalised and broken
up into smaller, regional outfits, the Archbishop of Canterbury said on Monday.Archbishop Welby spoke at an event in Westminster on Monday evening, organised by the Bible Society, on the question: "How do we fix this mess? Long-term solutions to the financial crisis."
He said that banks that were distanced from local communities did not have a "broad sense of promoting the well-being of a region of which one is an integral part". He had concluded that "at least part of the banking system should be local, not London-based, and have its root in its own community. . .
"In simple terms, we need to recreate the local, and the easiest way to do that . . . is to kill two birds with one stone by recapitalising at least one of our major banks and breaking it up into regional banks."
Archbishop Welby said that the "symptoms" of failures in the financial markets had been "those of a failure of confidence. . . Historically, the great failures in banking have led to very, very long periods of recession at best, and I would argue that what we're in at the moment is not a recession but essentially some kind of depression. And it therefore takes something very, very major to get us out of it in the same way as it took something very major to get us into it."
To restore confidence in banking, it was important that attention was paid to "professional standards," Archbishop Welby said. "We cannot go on with banking being essentially something that people drift into in the way that I drifted into being a group treasurer."
Archbishop Welby also called for a "revolution in the aims of the banks". They should not exist to "maximise the returns only for their shareholders. . . They exist for the benefit of the whole of society."
Archbishop Welby also spoke of the need for a culture of virtue in banks. "Good culture requires a ruthless honesty and a deep willingness to be made very uncomfortable indeed through listening to things that one does not want to hear. The creation of virtue is community-based; we correct each other. But good culture and virtuous cultures only develop in communities of trust."
A Downing Street spokesman said on Tuesday that the Prime Minister and the Chancellor "agreed with the Archbishop's analysis that we have a slow and difficult recovery because of the problems in the banking system", but stopped short of describing the situation as a "depression."