Banks need own ‘Equitas’

Lord Levene, chairman of the Lloyd’s insurance market, has said its Equitas model could be used by the banks to put their past mistakes behind them.

Lloyd’s bundled its past debts and poor underwriting into a single bailout pool, Equitas, 12 years ago, allowing the market to continue under new, tougher rules and stricter financial controls.

Lord Levene says, in an interview of the Financial Times, that the banks should do the same.

"If you have got this great boulder hanging over your head you need to concentrate on that all the time," he said. The FT said Lord Levene said it makes it easier to move on, "if you say we will let someone else concentrate on that and we will carry on running the ongoing business".

The Lloyd’s chairman said: "Lloyd's has changed from almost a watchword for bad management of a large financial institution into one which is incredibly conservative but is doing what it is supposed to do, which is to underwrite major risks all over the world and to base that on a very firm base of our assets and our underwriting policy.”