Tag: Banks

Bankers cooking with Gas?

The separation of retail and investment banks is back in the news following the Chancellor’s recent Mansion House speech. Ever since the Government bail-out of Royal Bank of Scotland and Lloyds in 2008, there has been a pressing desire to ensure that tax-payers are never again called upon to rescue the financial system. The Independent Commission on Banking, chaired by Sir John Vickers, is looking at alternatives. The Chancellor has endorsed their interim report and awaits the final report in September.

Compulsory separation of business entities is not new. It has been used as a solution to behavioural business problems in many contexts, usually after a period of fierce debate during which the business(es) argue that separation is unnecessary and unworkable, or a combination of both. We are certainly seeing those arguments advanced in the case of the banks. Not just from the bankers: many commentators are unconvinced, too.

Read more

Banking on it

A friend writes to tell me that she has been appointed to the Future of Banking Commission set up by Which?. Which reminds me that I have yet to return to my September Blog on the subject of regulation, in particular the regulation of banks.

I don’t subscribe to the “too big to fail” approach. I don’t believe it is about size. Who, prior to 2007, would have thought that Northern Rock was “too big” in any meaningful sense of the phrase?

Read more