Minggu, 06 Mei 2012

Plans to split retail banking and investment banking to be formally unveiled in Queen's Speech

Plans to split retail banking and investment banking to be formally unveiled in Queen's Speech

By Rob Davies

PUBLISHED: 16:06 EST, 6 May 2012 | UPDATED: 16:06 EST, 6 May 2012


Plans to split retail banking and investment  â€" or ‘casino’ â€" banking are to be formally unveiled in the Queen’s Speech this week.

The Government will use the monarch’s annual address to reveal its plans to implement recommendations made by Sir John Vickers’s Independent Commission on Banking.

Chief among the reforms will be the ‘ring-fencing’ of high street banking operations from investment activity, which is deemed to pose a risk to ordinary savers.

George Osborne stands in front of Parliament

Making plans: Chancellor George Osborne wants to reduce the banking risks

A White Paper due to be published on June 14 â€" to coincide with the Chancellor’s Mansion House speech to the City â€" will also include some of the ICB’s other recommendations to improve the landscape for bank consumers.

The speech is likely to include a promise to promote fiercer competition among lenders, by making it easier for customers to switch their account from one bank to another.

It will also flesh out plans to put ordinary customers’ savings and deposits at the front of the queue to be paid back in the event that a bank should fail â€" the so-called ‘depositor preference’ rule.

Consultation on the ICB’s proposals has been ongoing since December, when the Government accepted the findings of a report put together by Sir John Vickers and his team.

Now that the consultation period is over, the Government is expected to say that it is on target to bring forward draft legislation by the autumn, followed by full parliamentary scrutiny.

A Treasury spokesman said: ‘We said that we would legislate to fully implement the Independent Commission on Banking to make Britain’s banking system safer by the end of this parliament, and we are on track to do that.

‘These far-reaching reforms will help solve the dilemma of how Britain can be home to one of the world’s leading financial centres without exposing British taxpayers to the massive costs of those banks failing.’

The drive to reform the banking system comes as the industry faces the possibility of a full-scale probe into the mis-selling of interest rate ‘swaps’ to small businesses.

The Financial Services Authority is looking into allegations that banks sold the interest rate derivatives products to firms that did not need them.

It will decide next month whether  to take what it calls ‘enforcement action’, after demanding further information from the banks, including HSBC, Barclays, Lloyds and Royal Bank of Scotland.

Barclays has apologised to the regulator for asking clients not to pass on information to the regulator about the sale of the financial products.

Banks have denied that they mis-sold interest rate swaps to their customers. The industry has already been rocked by charges for the mis-selling of  loan insurance.

The taxpayer-backed banks alone set aside nearly £5bn to cover the cost, while Barclays was forced to make a £1.5bn provision.

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Winseer , I could not agree more , immunity from collateral damage !. Osbourne is not only out of touch with the electorate he is out of touch with the economy !. Will he stop giving our borrowed money to the IMF and EU ?, and start investing in British business !.

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Doh! Separating the two this late in the day will only achieve the unenviable scenario of a "retail banking collapse that now need not be bailed out by investment bank profits" They'll carry on laughing all the way to the "casino" and back, having effectively been made immune from the "retail collateral damage"! Doubtless we'll soon have transaction charges on all cash machines, standing charges for having a current account with less than a grand in it, no interest on current accounts - just in time for rates to rise that would have helped out otherwise - and then of course the massive charges for putting a foot wrong anywhere. - £50 for every returned item, bank mistake, late wage payment, and lots of other things that are rarely the customer's fault. If this is what is meant by separating the "good bank from the bad bank" then the public are being told the about-face version! Investment banks cope with market losses better than retail banks cope with borrower default.

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All a façade. They can't go back to traditional prudent banking because it will pop the housing bubble.

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So what does it mean to savers? Better protection? I thought savers were protected to £85,000 for single and £170,000 for joint. That's good protection anyway as long also as rates are fairly ok. If they split, what options do savers get? Rubbish rates from the retail side (but presumably still protected), and perhaps higher rates from the investment side, but is the protection taken away? It seems to me that savers will still suffer with this and may have to go chasing returns from riskier investments.

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Ah.Glass Steagall at last.That didn't take long then,only about 4 years for a decision!

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The end of this Parliament is far too late. It must be scrutinized by the best in the industry and pushed through parliament to become law as soon as possible. We don't want an election getting in the way of getting this into law and working.

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Finally. Can't believe how long this has taken. This legislation better have teeth and it better work.

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