'Electrify' bank ringfence, says standards commission
The banking standards commission has put the possibility of a full break-up of the banks back on the political agenda by calling for the ringfence between high street and investment banks to be "electrified".
The move risks opening up divisions with the chancellor, George Osborne, who urged the commission last month not to reopen the debate about the structure of banks. Despite his plea, it recommends that the government should have a reserve power to separate high street banks from investment banks if they do not implement the ringfence proposals in the report by Sir John Vickers' independent commission on banking (ICB).
Set up following concerns about ethics in banking raised by the £290m fine on Barclays for rigging the Libor interbank lending rate, the parliamentary commission on banking standards also warns that the way legislation is being introduced could make it possible to water down the ringfence recommended by Vickers.
Andrew Tyrie, the Conservative MP who chairs the parliamentary commission, said: "The proposals, as they stand, fall well short of what is required. Over time, the ringfence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ringfence.