Jenkins criticism spurs buyside to enter bank debate

Senior executives from the European investment industry are planning to enter the debate on the future of the banking industry in the wake of criticism from a Bank of England executive that the buyside has sat on the sidelines too long.

The initiative could lead to the creation of a formal discussion forum. Robert Jenkins, the member of the Bank of England’s Financial Policy Committee who last week urged fund managers to join the regulatory debate, has welcomed the move.

Martin Gilbert, chief executive of Aberdeen Asset Management, said: “The banks have good lobbying skills but asset managers have been pretty shy. I would support a forum where we can make our views known to both sides.” Jenkins said: “I welcome Martin Gilbert’s suggestion. I will work with him and like-minded others to facilitate such a forum.”

Richard Saunders, chief executive of the Investment Management Association trade body, expressed support: “There is a need for much more input from asset managers into the policy process around bank reform. Policymakers don’t ask themselves nearly often enough how banks can be made attractive to investors. And asset managers are sometimes too shy about putting forward a view.”

Saker Nusseibeh, chief executive of Hermes Fund Managers, said: “The asset management industry has a moral duty to get involved in the debate on bank capitalisation and regulation. This is not just about whether it makes banks more investible for us: it is wider than that.

“We are the investment professionals who spend our careers analysing banks, we have knowledge and views on how they can work better. We should share that, and the regulators and politicians should take that into account.”

Lindsay Tomlinson, National Association of Pension Funds board member, said: “If such a forum can be created, I would most certainly support it.”

Last week, Hendrik du Toit, chief executive of Investec Asset Management, said that managers should be the “transparent, modern, accountable face of capitalism”. He was speaking at Financial News’ 2012 Awards for Excellence in European Asset Management the day after Jenkins had criticised the buyside at the CFA UK’s annual chairman’s dinner. Jenkins claimed asset managers were the stakeholder group best qualified to shape the outcome of the banking reform debate but also the most silent.

Asset management sources confirmed that a group of managers had discussed the importance of making banks investible with Jenkins last week. A series of equity managers, including Neil Woodford of Invesco Perpetual, stopped investing in the sector in the 2000s because they could not work out how they were making their money.

A hedge fund manager said the main priority was to provide certainty: “The regulatory landscape is so unclear because of the politicisation of banks. I would put the ball decisively back in the far right-hand corner of the regulators’ court where they would probably falter and fail to return it.”