Britain's banks should separate their investment banking from their high street banking activities to minimise risks to public finances, according to the Vickers report published by the Independent Commission on Banking today.
The recommendation comes as part of a package of reforms that are estimated to cost between £4 billion (€4.7 billion) and £7 billion and which would radically change the banking system by 2019.
The aim is to create a more stable and competitive basis for the British banking system in the longer term and to minimise the risk of another bailout funded by British taxpayers.
“[The reforms also mean] a banking system that is effective and efficient at providing the basic banking services of safeguarding retail deposits, operating secure payments systems, efficiently channelling savings to productive investments, and managing financial risk,” the report says.
In response to the report, the British Bankers' Association (BBA) claimed today that banks are well on their way to implementing the “sweeping reforms” already brought in, and those still expected, by the British government, the European Union and global authorities.
Although the BBA recognises the importance of the commission’s reform package, it warns that any reforms need to be compared and agreed upon internationally.
“It is vital that the full impact any further reforms will have on the economy, the recovery and banks’ ability to support their customers is understood,” the BBA said.
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