Bank separation on the line as commission starts work
By Ian Dunt
The division of banks’ retail and investment functions is at the centre of a commission investigating reform of the banking sector.
The Independent Commission on Banking (ICB), which was appointed three months ago by the government, published its first issue papers on its work today, and confirmed the topic would feature in its investigation.
The plan to separate retail and investment is the baby of business secretary Vince Cable, who has long called for the measure so that banks can be allowed to fail in the event of another financial crisis.
Other topics being investigated by the ICB include limits on proprietary trading and investing, boosting competition and reform of market infrastructure.
“The list is not intended to be exhaustive and … the commission has not moved towards any particular options at this stage,” the commission said.
This week’s Liberal Democrat conference saw tough talk against the banking sector, with Nick Clegg and Mr Cable issuing outspoken attacks on the banking sector.
HSBC, Barclays and Standard Chartered have all warned they might leave Britain if further regulation is imposed on them, but government officials will also be mindful of continuing public anger towards banks and the need to ensure they are not seen to get off lightly while public spending is cut.
