Monday, 11 March 2013

UK: implementing structural reform of the banking sector

The Parliamentary Commission on Banking Standards published its second report of the 2012-13 session today: see here or here (pdf). Titled Banking reform: towards the right structure, the report considers the Government's response to the Commission's first report and provides suggested amendments in respect of the Financial Services (Banking Reform) Bill which receives its second reading in the House of Commons today and contains provisions requiring the ring-fencing of banks' activities following recommendations made by the Independent Commission on Banking.

Whilst welcoming some of the Government's responses the Commission nevertheless believes that the Government has not gone far enough. The Commission states, for example, that provision for full separation should be included in the Bill and it also expresses concern with the Government's failure to accept the recommendation that banks be subject to higher leverage ratio (something to which the Commission will return in its final report).

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