ICB Chairman Vickers to push ahead with banking reforms
Sir John Vickers, the Chairman of the Independent Commission on Banking (ICB) is set to ignore pleas from the banking industry that his reforms should be watered down because of the current chaos in the financial markets.
The first draft of the report is believed to have been completed last week and although its contents remain a closely guarded secret, with not even senior Treasury officials aware of its contents.
However, Sir John Vickers is known to be looking at controversial proposals at splitting the banks retail and investment arms in a bid to protect taxpayers and ensure that banks are not seen as too big to fail.
It is reported that senior bankers have tried to persuade the ICB to amend this proposal but this has been rejected by the ICB who say that the report should not be driven by short-term market positions.
The report is expected to recommend that the activities of banks are ring-fenced, separating the activities of high street banking operations and investment banking to lessen the potential impact of any future crisis in the sector.
However, many senior bankers believe that breaking up the banks could have negative unintended consequences. Some analysts believe that breaking up the banks could increase the likelihood of a run on the banks if another crisis occurs and that this could force banks to take precautionary deleveraging action which would cut off lending to the real economy in times of crisis.
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