Safer Banks Means Expensive Banking

Safer Banks Means Expensive Banking.

Chancellor George Osborne is to announce proposals that will give savers greater protection if a bank fails.  The Chancellor is to unveil a White Paper on banking reform, following recommendations made by the Independent Commission on Banking (ICB).

The ICB was set up to look at ways of making the UK banking system safer and one of its main proposals is to ring-fence High Street retail banking operations from riskier operations such as investment banking.

According to Steve Davies, lead partner of retail banking at the business services firm PricewaterhouseCoopers, the reforms would not prevent another banking crisis, but will enable a failed bank to be properly recovered in the event of a crisis.

He added that the reforms were likely to push up the cost of banking as the cost involved to implement the regulation is going to be substantial and the regulations are likely to force the banks to hold more capital back and those costs will have to be passed on.

The banking reform plans will remain open for consultation until draft legislation is set out in the autumn.  Plans for the final legislation are expected to be in place by 2015.