Offshore banking 'could increase in future'

The Walker review could damage the UK financial services sector over the long term, the Investment Management Association (IMA) has suggested.

In its response to the ongoing independent report, the group indicated that banks could move businesses offshore if the regulatory framework was toughened up to too great an extent.

Sir David Walker is currently looking into risk management at bank boards in the wake of the financial crisis and will present his findings later in the year.

Executives have faced heavy criticism for allowing financial firms to pursue unsustainable business models in the run-up to the credit crunch, leaving them vulnerable to huge losses when the downturn came.

Two UK banks have been fully nationalised as a result of the crisis and billions of pounds of public money has been spent in emergency bank bailouts.

Liz Murrall, director of corporate governance and reporting at IMA, said: ’The crisis has shown that large banks and broker dealers give rise to certain systemic issues that may necessitate measures to address and improve their governance.

’However, it is important that the Walker Review … understands the different types of risks different institutions pose. Otherwise, this could cause sectors within the UK’s financial services industry to be driven offshore.’ ADNFCR-2318-ID-19238242-ADNFCR