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Ring-fencing banking activities will create more risk, says RBS chief

Royal Bank of Scotland chief executive Stephen Hester says proposals to ring-fence retail and investment banking operations would create more risk in the banking industry.

The ICB report, which is due to be published in September, is looking at ways at avoiding banks which are “too big to fail” and another banking crisis.

Hester yesterday told MPs in a Treasury Select Committee looking at the Independent Banking Commission’s banking proposals that ring-fencing banking operations would be costly to banks.

Hester said: “I believe that creating a ring-fence increases some of the systemic risk and decreases the ability of banks to withstand the risk, and has significant cost to it.”

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