The Bankwatch

Tracking the consumer evolution of financial services

UK banks expecting significant changes to their balance sheet from ICB report

Strong signals coming out on the April 11th release of the Independent Commission on Banking report that it will include some form of separation of High St banking from other more risky parts of banks.  Also, though a newer aspect has crept in whereby the operational plumbing will somehow also be curtained off.

Bank panel report set to cheer investors | FT.com

The interim report will indicate the Commission’s clear preference for how the banks should be restructured, leaving only technicalities to be worked through by September.

It will build on a speech by Sir John in January in which he suggested that “subsidiarising”, or ringfencing, the different operations of a “universal bank” could be an effective way to make it safer.

Bankers say there are essentially three possible forms of subsidiarisation – geographic (a structure already employed by HSBC); functional, involving the creation of separate subsidiaries for distinct business activities such as high-street banking and investment banking; and operational, a structure that would involve pooling all a bank’s “plumbing” – IT, payment systems and so on, into one unit that could remain standing even if the bank’s core business was blowing up.

Written by Colin Henderson

April 1, 2011 at 08:50

Posted in Uncategorized

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