UK business secretary backs Future of Banking report

Britain’s Business Secretary Vince Cable has endorsed report that recommends that the investment banks should be broken up.

The cross-party Future of Banking Commission report has urged the government to consider a break up of the big integrated banks.

It may be noted here that considerably big banks such as Royal Bank of Scotland, Barclays and Lloyds Banking Group own both retail as well as investment banking business. Their huge size made it hard for government to handle during recent recession.

Commenting on the topic, a commissioner of the Future report John McFall said, “This report is an example of coalition politics before the coalition. Cable has endorsed the report and that should give fair wind to how the government will look at this.”

The report also urged the government to ask banks to separate their business trading securities from advising corporations. It also recommends the establishment of “living will” for each bank, which will detail how a bank will avoid a taxpayer bailout if it gets into trouble.

The report has made a total of 39 recommendations, which include more protection for savers and a ban on bonuses not linked to performance.

HSBC, Barclays, RBS and Lloyds declined to comment about the recommendations saying it would be too early to comment on the report.