LONDON: The British government will give its full backing to a shake-up of the banking sector proposed by the country's Independent Commission on Banking (ICB), British Business Secretary Vince Cable said on Sunday.
"Our own financial services sector needs reform. Our big banks were at the very centre of the financial crisis, what the Europeans call Anglo-Saxon financial capitalism. It needs reform," Liberal Democrat minister Cable told the BBC.
"That's why tomorrow the government is going to launch this initiative on the banks accepting in full the Vickers commission. We're going to proceed with the separation of the banks, the casinos and the retail business lending parts of the bank," he added.
In September, the ICB headed by Oxford University academic Sir John Vickers said top British banks should "ring-fence" or protect their retail banking operations from their riskier investment banking arms, in order to give better protection to taxpayers in case of future financial crises.
It said banks should hold core capital of 10 percent, plus a further 7 to 10 percent of capital that could take the form of "bail-in" bonds debt that can take a loss or convert into equity to recapitalise a bank if it hits trouble.
There would also be limits to the extent to which a bank could use money in its retail arm for its investment bank a move that will increase funding costs for British lenders.
The ICB stopped short of seeking a full split of a retail and investment bank into two, separate companies. Instead, it said banks could keep their parent holding company but should set a "ring-fence" between the retail and investment arms.
Britain's top banks Barclays, HSBC , and part-nationalised lenders Royal Bank of Scotland and Lloyds have lobbied against much of the reforms.
They have argued they could be put at a competitive disadvantage to rivals in Europe, Asia and the United States, who do not face the same sort of shake-up.
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