The Confederation of British Industry says the Government would be “barking mad” to push forward with plans to ringfence UK banks given the current economic conditions.
In an interview with the Financial Times, CBI director general John Cridland warns it would be wrong to implement Sir John Vickers’ expected proposals to separate the retail and investment arms of banks in the midst of the current European debt crisis.
He says: “Taking action at this moment – this moment of growth peril, which weakens the ability of banks in Britain to provide the finance that businesses need to grow – is just to me barking mad.”
Over the weekend, British Bankers’ Association chief executive Angela Knight also called for a delay in implementing Vickers’ plans. She says: “We have a high degree of uncertainty, market turbulence and lack of confidence that governments in other countries have got a sufficient grip on their economies. We are in for a very difficult autumn.”
Vickers’ Independent Commission on Banking is due to produce its final report by the middle of September.
Chancellor George Osborne signalled his backing for the ringfencing plan at a Mansion House address in June. Osborne is reported to favour giving banks extra time to prepare for the new regime, perhaps until 2019, whilst Business Secretary Vince Cable supports a quicker implementation.
The Guardian reports an aide to Cable as saying the current market turmoil is no excuse to delay ringfencing plans.