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Lord Lamont in last ditch call for total bank split

Former Chancellor Lord Lamont has made a last ditch call on the Government to force a complete separation of banks’ retail and investment arms days before the Treasury publishes plans for bank reform.

On Thursday, the Chancellor will give his Mansion House speech detailing plans set to be released earlier that day that will propose banks ring-fence their retail operations in line with the recommendations of the Independent Commission on Banking. The ICB also called for the two ringfenced arms of universal banks to operate under different corporate structures with “minimal crossover” between them.

Speaking in the House of Lords yesterday, Lamont who was Chancellor under John Major, said he fears the ringfence will prove ineffective.

He said: “Bankers, despite the greed and folly that many of them evinced during the Goodwin-Brown era, are clever people, and they will find ways round it. Moreover, what we are talking about here is, at bottom, a matter of banking culture.

“The plain fact is that the prudent culture of retail bankers and the adventurous culture of investment bankers are diametrically opposed. With the best will in the world, it is hard to see how two quite different and opposed cultures can co-exist within the same corporate entity. There needs to be complete structural separation, not just a ring-fence.”

Lamont was speaking in a debate on the Financial Services Bill which abolishes the FSA, replacing it with the Prudential Regulation Authority and the Financial Conduct Authority. Labour Treasury spokesman Lord Eatwell said the bill should have included the measures being put forward in Thursday’s Banking Reform Bill.

He said: “Instead of drafting a new template for the financial services industry, superseding all past relevant Acts and incorporating the new banking Bill that is yet to be published enacting the [ICB] proposals, the Government have constructed a dog’s breakfast of amendments to earlier legislation.”


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  1. Norman Lamont was chancellor under John Major, not Margaret Thatcher

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