Click the pic to peruse the UK government’s white paper on bank reform, published on Thursday in response to Vickers…
The consultation is open until September. On a quick read-through we’d highlight some of the proposed exemptions from ring-fencing retail ops — also this move on leverage ratios: Read more
Britain’s banks will face an annual bill of as much as £6bn ($9.5bn) to comply with the reforms of the Vickers Commission, the FT reports, citing people who have seen the panel’s final report, published on Monday. As foreshadowed, the central recommendation of the Independent Commission on Banking will be that banks’ core operations must be ringfenced from the rest of their businesses. The cost impact of the changes will mainly be the result of higher funding charges for the banks’ operations that are left outside the more highly capitalised ringfenced entity. But in a crucial concession to the wide spread of business models among the banks, the commission will not dictate where each institution must place the ringfence, instead allowing lenders and their customers a degree of choice.
David Cameron has given the strongest signal yet that he will back recommendations to build a firewall around Britain’s retail banking operations, the FT says, but he wants to delay the implementation of the structural upheaval for a number of years. The prime minister’s allies say he is anxious about the impact of radical and costly reform on the banking sector at a time of flat growth and is opposed to anything that would undermine business lending and impede the recovery. But colleagues say Mr Cameron is prepared to back the changes – to be outlined on Monday in Sir John Vickers’ long-awaited report on banking reform – if the split between retail and riskier investment banking is phased in after the planned 2015 election.
EU’s internal market commissioner says the EU proposal to harmonise capital rules will still allow the UK to ringfence its retail banks. Michel Barnier told the FT that his proposal would split into two jurisdictions so that the UK, Spain and other countries wishing to impose additional demands on parts of their banking sector would be able to do so. Some investors had interpreted the wording of Mr Barnier’s Capital Requirements Directive 4, which has to be approved by the European Council and Parliament, as effectively barring the UK’s Independent Commission on Banking, chaired by Sir John Vickers, from pursuing its proposals to force banks in Britain to ringfence their retail operations. But Mr Barnier said: “It seems [the Vickers Commission] may be proposing 10 per cent for retail banks. That would be possible in my proposal. We think we have the flexibility we need,” he said. “We do think the [Vickers] proposals can be integrated into our framework.”
This piece of news slipped most of the world by…
A court order has been made to place Southsea Mortgage and Investment Company into the Bank Insolvency Procedure and appoint BDO LLP as the bank liquidator. Find out what this means for Southsea’s customers. Read more
That ring-fencing idea — it’s just posturing, right? Right?
No? Read more