George Osborne backs direction of Independent Banking Commission
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Chancellor George Osborne believes the Independent Commission on Banking is “going in the right direction” with its expected recommendations to reform the banking sector, according to a report in today’s Financial Times.
The report quotes a Treasury aide suggesting Osborne is happy with the direction of Sir John Vickers’ commission and that any thought the Chancellor would not implement the commission’s findings was “wishful thinking” by the banks.
In a speech in January, Vickers said the commission was looking at “ring-fencing” retail banking and suggested some kind of separation between retail and investment banking may be required.
He said: “The question I want to raise is whether and, if so, how structural reforms might relate to other reform activities, especially those to enhance banks’ capital structures and the credibility of their recovery and resolution plans to cope with crises.
“Credible resolution would seem to require some sort of separation…but perhaps the credibility of resolution plans can be ensured otherwise than by forms of separation, and the benefits would of course need to be weighed carefully against costs.”
Bank of England governor Mervyn King continued his calls for a separation between retail and investment banking over the weekend. He told the Daily Telegraph “the concept of too big to fail should have no place in a market economy”.
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