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MPs press to see banks’ cost-benefit analysis data

The Treasury select committee has called on the Independent Commission on Banking to publish the cost-benefit analysis it used to establish that a total seperation of retail and investment banking would be too costly.

Last month, the commission, which is chaired by Sir John Vickers, published its interim report on reforming the banking system.

It proposed a number of measures, including a requirement for banks to ringfence their UK retail banking activities.

During a TSC hearing this week, Vickers said while the commission has not ruled out a total separation of retail and investment banks, a cost-benefit analysis shows total separation could place “serious costs” on banks, with little extra benefit.

Vickers said the commission has not released the figures because it is concerned they are not robust enough.

Select committee chair Andrew Tyrie said: “People out there are saying we need full separation and they need to know what the costs of that are. We would like to see as much as possible of that in the public domain as soon as possible, and the numbers should, in as far as is possible, be agreed with the banking community.”

Vickers said the ringfencing proposal is “sensible” because it will deliver “almost all” the financial stability benefits without imposing extra costs on the industry.


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

  1. Julian Stevens 27th May 2011 at 9:29 am

    There should also be an Independent Regulatory Oversight Commission to scrutinise the FSA’s Cost:Benefit Analyses, given that they seem generally to be based on cost figures plucked out of the air, set against benefits which are at best speculative and open neither to challenge or debate.

  2. I agree the FSA should be held more accountable, as does Hector Sants it seems, but I think this is a positive change in culture where politicians can no longer expect the wrath of the public to fall on the banking community alone. Enough time has passed for a progressive government to implement improvements and I hope those politicians, like Mark Hoban, are ready to fall on their swords as facts continue to prove misguided errors in a staunch defence of all things FSA and major bank orientated. More facts and less bias fiction please!

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