Separating retail and investment banking
U.K. Business Secretary wants to split banks
LONDON (MarketWatch) -- U.K. Business Secretary Vince Cable is keen on separating retail from investment banking despite assurances from the Treasury that the prospect of such a split hasn't been concluded yet, the Sunday Telegraph reported.
"The coalition agreement is quite explicit ... The purpose of this commission is to look at the separation of retail and investment banking, that's the terms of reference," the report cited Cable as telling a documentary on banking to be screened by Channel 4 on Monday.
The Telegraph report said Cable, the Liberal Democrat Cabinet minister, "is thought to be distant" from the Conservative Chancellor, George Osborne.
Cable was quoted as saying that there was an obvious "direction of travel" towards separating retail and investment banking.
He also suggested that the U.K. could act unilaterally if there was no global agreement.
"How we do that, over what time frame, whether you do that nationally or internationally, that kind of issue we have to pursue. But that is the clear direction in which we are going," Cable said.
The Telegraph report cited sources as saying that Osborne would make no decisions on banking until a banking commission put out its report in the first half of next year.
not surprising, this is the UK we're talking about
Ignore Vince Cable. He's been blagging to the media about his nutter socialist plans, but I haven't heard any other member of the coalition supporting these crazy ideas. I'm sure Osbourne has more sense.
Yeah, Cable is a little ridiculous. The UK has no incentive to be the first mover in any sort of financial regulation.
Retail and True IBD don't need to be separated. It's really the buyside of the banks that has the conflict of interests.
Separating retail banking from investment banking is like separating Glass from Steagall. They're just inseparable.
I don't understand the aversion to splitting apart Investment Banking from Retail Banking.
Lower Comp? Anyone remember the 90s & 80s. The only thing retail banking does is ensure that the bonuses of the bosses are more stable in value (b/c of more stable share prices), than those at pure-play investment banks.
Retail Banks being paired with Investment Banks are conglomerates, that's why they're awful. Everyone has glowing words about JPM, but that place is like Citi in the making...their vaunted risk management was well on display in June given their 250 mm loss in prop trading. Sure 250 mm is a drop in the bucket when looking at their 4 billion in NI, but which genius at the bank let their coal group place a one-way un-hedged bet on a coal basis trade is indicative of the whole place...another TBF.
I say split them up, then if one of them goes down no-body cares. It's all empire building, which is ironic, considering everyone on this board is a strong proponent of capital markets making the economy more efficient.
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