UK Independent Commission on Banking: proposals in September

The Independent Commission on Banking
(ICB), the UK-based and government appointed body to oversee banks,
is going to publish the first of its final recommendations for UK
banking reforms in September.

The ICB will reveal its proposals
regarding possible changes in the banking system on 12 September to
the government, who will then decide whether to go through with the
proposals or adopt them in part.

In April, the ICB published its initial
proposals. Its recommendations included a ring-fencing of UK banks,
as well as demanding that banks hold 10% of their capital against
assets.

The UK chancellor George Osborne is backing the proposals,
which, if implemented, would break up banks’ retail and investment
banking operations so that the latter could be allowed to fail in
another financial crisis.

The the retail banking business could continue to operate
without beinf affected by the financial failings of the investment
banking unit.

The ICB also
recommended the sale of almost a fifth, or 632 units, of Lloyds
Banking Group’s UK branch network in order to downsize its dominant
market share.

The UK government
holds a 41% stake in the bailed-out lender.

A statement published after ICB’s meeting on 13
June read: “The Commission reviewed and discussed further analysis
of reform options including a UK retail ring-fence, measures to
increase loss absorbency and measures to promote competition in UK
retail banking.”

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