The Vickers verdict

Author: | Published: 3 Oct 2011

The UK's Independent Commission on Banking (ICB) report was released on September 12 to much interest in the industry.

The Commission, led by Sir John Vickers, was asked by the chancellor of the exchequer to consider structural and related non-structural reforms to the UK banking sector to promote financial stability and competition.

The interim report, known as the Vickers report, was released in April and made headlines by recommending the ring-fencing of UK institutions' investment and retail banking divisions.

The ring-fencing plan is clarified in the final plan and again attracted the most attention from the media. The ICB argues that all retail banking business should be conducted by a separate subsidiary, with independent governance and its own padding of extra capital. Capital could be moved from the ringfenced bank to the investment bank if the capital ratio of the ringfenced bank did not fall below the 10% minimum.

However...