British banking panel to consider splitting up high street banks

08:06, September 25, 2010      

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Britain's Independent Commission on Banking on Friday said it will consider the case for breaking up high street banks, including separating retail and investment banking.

The radical reforms that the ICB said it would look at could have a big impact on the structure of banking. It also could see some banks relocate their headquarters out of Britain, for example HSBC, which could move to Hong Kong.

ICB chairman Sir John Vickers, an economist and academic at the University of Oxford, said at a press conference that "banks can be made sufficiently modular so that parts can fail without hitting the public."

"Experience shows that the risks from not asking hard questions about financial stability and competition are far greater than from doing so," Vickers said. "Questions about the structure of banking need to be debated in an open, rational way, and we would like to invite anyone with an interest to provide us with views and evidence."

The ICB said extending competition in the banking sector would also be examined. One British bank, Lloyds, holds 30 percent of all personal bank accounts in Britain. Lloyds was one of the banks that had to be rescued by the government in the wake of the global financial crisis in 2008.

Britain's banking structure is unusually dominated by a small number of big banks Just six banks hold 88 percent of all deposits. By comparison in the United States the top eight banks hold just 35 percent of deposits.

Angela Knight, chief executive of the British Bankers' Association, said "we believe the UK industry has already taken significant steps to improve its financial position."

"Our retail banks - as independent research has shown -- also already provide customers with more choice, greater protection and offer better value for money than in other countries," Knight said.

The ICB will make recommendations to the government by the end of September 2011.

Source: Xinhua


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