Britain to announce separation of banks: minister

18th December 2011, Comments 0 comments

The British government will Monday accept in full recommendations to split banks' retail and investment units in a bid to avoid a repeat of the financial crisis, business minister Vince Cable said.

A report by the government-appointed Independent Commission on Banking, published in September, recommended measures to protect retail operations as part of sweeping reforms to be brought in by 2019.

The radical overhaul is an attempt to avoid a repeat of the massive state bailouts of lenders, including Royal Bank of Scotland, sparked by the 2008 financial crisis.

Cable told BBC television Sunday that the government would announce it had accepted the recommendations of the commission, chaired by ex-Bank of England chief economist John Vickers.

"Tomorrow the government is going to launch this initiative on the banks, accepting in full the Vickers Commission," he said.

"We are going to proceed with the separation of the banks."

Finance minister George Osborne will announce that the government has accepted the plans in a statement to parliament.

The overhaul of banking, which will also require banks to substantially increase their capital buffers, is set to be pushed through despite an expensive and intensive lobbying effort on the part of lenders.

The commission has estimated that the annual pre-tax cost to lenders of the reforms will total between £4.0 billion and £7.0 billion (4.7 billion to 8.3 billion euros/$6.2 billion to $10.9 billion).

Analysts believe that the higher charges risk being passed on to customers.

© 2011 AFP

0 Comments To This Article