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Banking inquiry to consider break-ups Banking inquiry to consider break-ups
(about 1 hour later)
The issue of whether banks' retail and investment operations should be split is to be looked at by a government inquiry into the banking sector.The issue of whether banks' retail and investment operations should be split is to be looked at by a government inquiry into the banking sector.
The reform is one of a number of options being considered by the Independent Commission on Banking.The reform is one of a number of options being considered by the Independent Commission on Banking.
Critics have said that such a split could damage the UK's competitive edge and make banks leave the UK.Critics have said that such a split could damage the UK's competitive edge and make banks leave the UK.
The ICB, chaired by Sir John Vickers, has been set up to look at financial stability and competition.The ICB, chaired by Sir John Vickers, has been set up to look at financial stability and competition.
HSBC recently warned it would consider moving its headquarters from the UK if the commission recommended a break-up, while Standard Chartered has also recently questioned the future of its UK headquarters.HSBC recently warned it would consider moving its headquarters from the UK if the commission recommended a break-up, while Standard Chartered has also recently questioned the future of its UK headquarters.
'Hard questions''Hard questions'
The ICB will also look at whether what it calls "market concentration" should be reduced - something that could result in visible changes to the way the banks operate on the High Street.The ICB will also look at whether what it calls "market concentration" should be reduced - something that could result in visible changes to the way the banks operate on the High Street.
The BBC's business editor, Robert Peston, says that if the ICB were to decide this concentration is unhealthy, it is Lloyds - which provides 30% of all current accounts in the UK - which looks most vulnerable.
He says perhaps the most striking figure from the ICB is that the top six British banks control 88% of all deposits in this country, compared with a 68% market share for Germany's top seven banks, and just 35% for America's top eight.
Other topics for scrutiny include whether banks should be restricted as to how much they should be allowed to use their own money for investment trading, as well as whether an institution should have a "living will" - a declaration of how a bank would wind itself down should any future financial crisis fatally undermine it.Other topics for scrutiny include whether banks should be restricted as to how much they should be allowed to use their own money for investment trading, as well as whether an institution should have a "living will" - a declaration of how a bank would wind itself down should any future financial crisis fatally undermine it.
The ICB's five members have asked interested parties to give their views and are expected to question the chief executives of all of the UK's largest banks.The ICB's five members have asked interested parties to give their views and are expected to question the chief executives of all of the UK's largest banks.
Sir John Vickers, the ex-chairman of the Office of Fair Trading, said: "Experience shows that the risks from not asking hard questions about financial stability and competition are far greater than from doing so."Sir John Vickers, the ex-chairman of the Office of Fair Trading, said: "Experience shows that the risks from not asking hard questions about financial stability and competition are far greater than from doing so."
He is joined on the commission by Clare Spottiswoode, the former director-general of Ofgas, Martin Taylor, a former chief executive of Barclays, Bill Winters, the former co-chief executive of JP Morgan, and Martin Wolf, the chief economics commentator at the Financial Times.He is joined on the commission by Clare Spottiswoode, the former director-general of Ofgas, Martin Taylor, a former chief executive of Barclays, Bill Winters, the former co-chief executive of JP Morgan, and Martin Wolf, the chief economics commentator at the Financial Times.