Why Kay, Volcker are wrong about ringfencing

Author: Danielle Myles | Published: 6 Nov 2012

It is possible to effectively ringfence retail and investment activities without restructuring banks into essentially two separate entities, the UK market has said.

But the cost and energy of creating a ringfence could force some universal banks to opt for complete separation.

Speaking last week before the UK Parliamentary Commission on Banking Standards (Commission), Professor John Kay said it was incredibly difficult to write rules that make a ringfence sufficiently robust. The market, however, thinks differently.

“It is entirely feasible for a valid and workable ringfencing system to occur within the existing banking and financial sector,” said Dominic Griffiths, head of Mayer Brown's banking & finance group in London.

In his submissions before the Commission, Kay said: “The reason I wrote the Narrow Banking...



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