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Investment and retail bank link needs radical surgery

Business Secretary Vince Cable says banks still face “fundamental surgery” in terms of the link between investment and retail banking and the lack of competition in the sector.

In an interview on The Andrew Marr Show on BBC 1 on Sunday, Cable said the Independent Commission on Banking, chaired by Sir John Vickers, will bring structural changes within the banks.

He said: “Ultimately, these problems are only going to be dealt with when we have the big structural reforms, which the Banking Commission is dealing with. In other words, the whole question of increasing comp- etition and dealing with this issue about the link between the retail banks and the investment banks. These big structural questions, which are the fundamental surgery, are to come.”

Marr asked Cable if banks will be forced to split retail and investment banking. Cable said: “It needs to be fundamentally reformed. There must be change and it will have to be radical.”

He questioned Cable about the Government’s agreement with the banks, Project Merlin, which will see Barclays, HSBC, Lloyds, RBS and Santander make £190bn available in gross new lending to businesses this year. This includes £76bn for SMEs.

Under the agreement, Barclays, HSBC, Lloyds and RBS also agreed to disclose the remuneration details of their executive directors and the five highest- paid senior executives.

Marr asked Cable if he disagrees with Lord Oakeshott, who resigned over the agreement, calling it “weak and waffly”.

Cable said: “Some of the most important things in the discussions on the banks this week took place outside of the Merlin agreement. We increased taxes because we think the banks are in a stronger position in their ability to pay more tax.

“The Government agreed that we will have tougher legislation on disclosure, so we know how much the top people in the banks are paid.”



CPMA will have power to ban products

The Consumer Protection and Markets Authority will be given the power to ban retail products and notify investors of upcoming enforcement action against firms. In an interview in the Financial Times today, Treasury financial secretary Mark Hoban (pictured) says the CPMA, to be renamed the Financial Conduct Authority, will be able to ban products or […]

Banks strike deal to lend £76bn to small firms

The UK’s biggest banks have signed an agreement with the Government that will see £190bn made available in gross new lending to businesses in 2011, including £76bn to SMEs. Under Project Merlin, Barclays, HSBC, Lloyds Banking Group, RBS and Santander will increase gross new lending to businesses by 6 per cent, up from £179bn in […]


Cofunds powers execution-only service

Cofunds has announced it will power’s new execution-only service. From today, will provide the service for investment business, giving customers access to the Cofunds investment Isa and its range of over 1,500 funds. Cofunds says it is not moving towards a direct to consumer service. It adds will be solely responsible for […]

In search of a plan B

Lenders continue to shy away from offering high-LTV mortgages and Paul Thomas asks if top-up loans or higher lending charges could get the market moving


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