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RBS chief says customers will pay ringfencing costs

RBS chairman Sir Philip Hampton has warned that expensive plans to ringfence its retail operations from its investment banking arm could see costs passed on to businesses and household customers.

RBS has already begun to overhaul its investment banking arm to prepare for the regulatory reforms. RBS plans to merge its global banking and markets division, which houses its investment banking activities, with its global transaction services arm, which is deemed one of the safer parts of the banks operations.

The ICB’s final report, published last September, called for the retail operations of universal banks to be ringfenced from their investment arms, a move commission chairman Sir John Vickers says takes taxpayers “off the hook” if riskier investment arms get into trouble.

The Government’s plan  to legislate on the structural reform of banks were confirmed in last week’s Queen Speech.

In an interview with The Sunday Telegraph, Hampton says the move could result in a squeeze for consumers and businesses as banks look to recoup their losses.

He says: “What the banks want to make sure of is that it’s not introduced in a way that is too expensive, because if it’s expensive then either taxpayers will suffer in our case, or customers will suffer, because we’ll have to eventually deal with our costs and reclaim some of our costs from customers.”

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