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Banking Commission chair sends warning over break-ups

Independent Commission on Banking chairman Sir John Vickers is expected to tell the large banks involved in both retail and investment banking activities that they should not expect to remain intact.

According to a report in the Financial Times, Vickers will use a speech on Saturday to outline a range of options which could be used to overhaul the banks, including measures which would force them to ring fence or “subsidiarise” their retail and investment activities.

The job of the Commission, which was set up by the Chancellor in June, is to consider reforms to the UK banking sector to promote financial stability and competition. It has been considering whether banks should be broken up or have their their retail and investment activities split.

The FT report says the Commission is unlikely to recommend the full-scale break-up of banks but has not ruled it out. It is due to report in September.

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Of course bank should be broken up as we have a situation at present that we have banks are so big and not allowed to fail. I’d also believe that we should stop banks and having investment arms and indeed insurance companies a good example of this is the Lloyds group with its ownership of Scottish Widows.

    What we need to return to is a banking community that concentrates its activities in its core business, rather than having organisations that have multiple interests. This would also mean that we would have organisations that are able to fail when they are run poorly. This would result in a more stable economy and have less of a potential domino effect which we have seen in the recent financial crisis.

  2. If Sir John makes recommendations that could result in our banks being placed at a competitive disadvantage compared to the United States then those recommendations will either be shelved or severely watered down I would think. Expect a damp squib!

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