Vickers defends his ring-fencing bank reforms
THE ARCHITECT of the UK’s post-financial crisis banking reforms staunchly defended his recommendation for retail banks to be ring-fenced yesterday, saying the case is stronger than ever.
Sir John Vickers, who headed up the Independent Commission on Banking (ICB) that recommended the reforms in 2011, told the House of Lords Economic Affairs Committee: “In my view the case for those measures is every bit as strong as when we made our report four years ago, arguably stronger still.”
Ring-fencing mandates banks that have both investment and retail banking operations to separate the two arms, to protect retail savings if the other part of the business falls into trouble. “This is part of the readiness for the next financial crisis, whenever it comes,” said Vickers.
Some bankers argue that new reforms have made ring-fencing redundant. “Building the walls doesn’t weaken the case for putting the roof on top,” said Vickers.
After Vickers, the MPs quizzed Jonathan Symonds, chairman of HSBC Bank and George Culmer, chief finance boss at Lloyds Banking Group.
HSBC, which has previously said it may move its headquarters from the UK, said it will face a bill of around £1.5bn as a result of new reforms. Lloyds said it would cost “several hundred million” pounds.