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Cable cool on bank split call

Cable cool on bank split call

Vince Cable has warned against reopening the debate on banking reform, but said the Government would consider a call from MPs and peers to give regulators power to split up banks who try to break the rules.

The Parliamentary Commission on Banking Standards said the current government plans to ringfence the investment and retail arms of banks do not go far enough, and called for “electrification” of the ringfence.

But the Business Secretary said reopening the debate on bank reform would create “further massive uncertainty”.

“We’ve come to a common view that the ringfencing solution – and a strong ringfencing solution – is the best way forward... The last thing we want now is to reopen the whole issue, to reinvestigate it, to create more uncertainty," he told the World at One.

“We’ve got a path forward. If there are practical proposals for strengthening it, for preventing the avoidance of the objectives of the legislation, obviously we’ve got to take those seriously.”

Earlier Andrew Tyrie, who chairs the Commission, explained that tougher sanctions were needed, since over time banks were likely to try to break the rules.

“What the Commission is saying today is okay, let’s give this a try, but if we’re going to give it a try, we’ve got to underpin it with much more robust rules and incentives to make sure the banks behave themselves in the long run," he told the Today programme.

Sir John Vickers, who wrote an initial report on bank reform in 2010, warned there was a "real risk that whatever regulatory reforms come in can get eroded or watered down".

The Shadow Chancellor Ed Balls backed the Commission's call, saying that if "the letter and spirit of the Vickers proposals are not delivered" then banks should be fully broken up. The CBI warned actually breaking up banks might be "detrimental" to business, but that the threat of break-up might help "concentrate minds" on reform.

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Press Release

Ring-fence needs electrification, says Banking Commission report

21/12/2012

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Ed Balls responds to the Parliamentary Commission on Banking Standards' first report

21/12/2012

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21/12/2012

On air

Anthony Browne: Breaking up banks would be changing the rules not punishing

21/12/2012 on Today, BBC Radio 4

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Andrew Tyrie: We will give strong ring-fencing a chance

21/12/2012 on Today, BBC Radio 4

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Lord Lawson: Threat of bank exodus from London unrealistic

21/12/2012 on Breakfast, BBC Radio 5Live

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Danny Alexander: Govt will respond to bank report in new year

21/12/2012 on BBC News

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Chris Leslie: Govt must not go weak on banking reform

21/12/2012 on BBC News

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Sir John Vickers: Real risk banks could dodge reforms

21/12/2012 on The World at One, BBC Radio 4

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Mark Field: A cloud of uncertainty hangs over City on banking reform

21/12/2012 on The World at One, BBC Radio 4

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Vince Cable: Last thing we want to do is reopen banking debate

21/12/2012 on The World at One, BBC Radio 4

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Lord Oakeshott: Government needs reserve powers to break up banks

21/12/2012 on BBC News

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