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British gov't to implement banking sector reforms


10:44, December 19, 2011

LONDON, Dec. 18 (Xinhua) -- The British government will carry out the recommendations of a key banking report, Business Secretary Vincent Cable confirmed on Sunday.

"Our financial services sector needs reform. Our big banks were at the very center of the financial crisis. The government is going to launch this initiative on the banks, accepting in full the Vickers Commission," Cable said in a TV interview with the BBC.

Cable was referring to the Independent Commission on Banking (ICB) commissioned in June 2010 by Cable and the Finance Minister, Chancellor of the Exchequer George Osborne to find ways of reducing systemic risk in the banking sector, and of reducing the future likelihood of moral hazard.

The ICB report under the chairmanship of Sir John Vickers, a former official with the central bank, the Bank of England (BOE), reported in September, with a series of recommendations designed to safeguard the financial sector from future collapse, and to protect the government from the necessity of intervening to prevent the failure of businesses which were "too big to be allowed to fail."

Cable said that the government was "going to proceed with the separation of the banks -- the casinos and the retail business lending parts of the banks."

"It's got to be done, we cannot have a position where the big banks are too big to fail, where there is a taxpayers' subsidy; we cannot have a risk of a repetition of the national catastrophe that we had three years ago," said Cable.

He confirmed that all primary legislation would be carried out before the end of the current parliamentary term in 2015.

Britain is heavily dependent on its large financial sector, which accounts for nearly 10 percent of its gross domestic product (GDP). The heart of the sector is the City of London, one of the world's financial hubs.

Osborne, for his part, would give a detailed account of the government's plans for banking reform in the House of Commons on Monday.

The timetable is then expected to include a White Paper next year to outline government policy, followed by full legislation before the next general election in 2015. The reforms are all expected to have been implemented by 2019.

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