British Banks Forced To Ring Fence Retail from Investment Banks

British Banks Forced To Ring Fence Retail from Investment Banks

www.bbc.co.uk

Chancellor George Osborne is to force banks to ring-fence their retail operations from investment banking.

In a speech on Wednesday he will say banks must be set up so that their branches and public savings and loans would not be damaged if their trading arms ran into trouble.

The legal separation of the functions of big banks was recommended by the Independent Commission on Banking.

(visit the link for the full news article)

This is excellent news. It stops the whole concept of "too big to fail" as if investment banks go under, the retail banking arm would be a completely seperate business entity not part of the investment banking group.

If banks insists on using risky investment strategies, investors will still lose money, which is part of the risk of investing, but the average high street bank user won't be affected by the collapse of the investment firm.

The flip side is that banks also won't be able to use the assets of their retail business as part of the investment arms as they would be considered seperate entities entirely.

Great move, Chancellor Osbourne. They should do the same thing in the USA.

If investment banks go under, so be it. Retail banks would not be affected, at all.

www.bbc.co.uk
(visit the link for the full news article)

I was attracted to your thread as I've just read an article in Uncensored mag that throws light on a pre -planned Banking Crash in Australia and New Zealand.
Not being a financial Wiz Kid - I don't know if this is something I/we should be acting upon. But the article provides this link 'NZ Reserve Bank Consultation Paper'

www.rbnz.govt.nz...

I'd really appreciate some one who understands the banking system to take a look at this as it does look concerning to say the least. Apparently Australia and NZ is just an example of what is happening Globally within the Banking Sector.

There is a few target dates for the Bank to act, the first one being 30th June 2011.

Is this a heads up for those with Deposits that are about to be wiped out?

beautiful girl .... wherevere you are ... la la la .. lol

Originally posted by quedup
I was attracted to your thread as I've just read an article in Uncensored mag that throws light on a pre -planned Banking Crash in Australia and New Zealand.
Not being a financial Wiz Kid - I don't know if this is something I/we should be acting upon. But the article provides this link 'NZ Reserve Bank Consultation Paper'

www.rbnz.govt.nz...

I'd really appreciate some one who understands the banking system to take a look at this as it does look concerning to say the least. Apparently Australia and NZ is just an example of what is happening Globally within the Banking Sector.

There is a few target dates for the Bank to act, the first one being 30th June 2011.

Is this a heads up for those with Deposits that are about to be wiped out?

What is yuor actual concern?

the purpose of the paper is

OBR is intended to act as a resolution tool that puts the cost of bank failure primarily on the bank’s shareholders and creditors rather than the taxpayers, minimises moral hazard and provides continuity of core banking services. The Reserve Bank developed the OBR policy following a review of its crisis management policies and instruments subsequent to the 1997 Asian financial crisis.2

So it's saying that the taxpayer should not be the ones who take the loss if a bank fails - which seems fair enough - although ring fencing investment from retail would also be a good idea as in the OP.

The 2nd part of it is that banks ned to remain open to enable normal financial transactions to continue, even if teh bank has actually failed - people still need to be able to make and receive payments and other normal transactions to keep the rest of het economy going - right down to the level of buying groceries.

which also seems quiet sensible as a means of limiting teh damage done by bank failures.

I'm not sure about the technical details of how this is all achieved, but the aims seems like good ideas.

BBC World News now reporting that the banks are fighting back saying it will reduce their effectiveness in the international marketplace.

Good !

glass-stegal act was the ring fencing from the last crash
taken out because of presure from the large banks
if any country does not do this
they are allowing direct looting of savings
in new zealand when the crisis hit in 08
our govenment "garanted" the money in their accounts
so now when banks go bust in new zealand
the people pay the banks for lost money (their lost money)
this is a set up for a much larger crash IMHO

any country that does not reinact this "ring fencing"
is allowing the future collapses to be "timed" by the banks

xploder

This just reinforces the notion I have that we are in fact in dire straights which is getting worse each day..

taking the UK.. new car sales down 11 months in a row.. airline profits expected to be down at least 78%.. the Reed Index shows starting wages along with the number of job opportunities down month on month. While the British tax payer is now a part owner of a high street music chain (HMV Group)

Ring fencing retail banking will help minimise the panic as we continue to slide down this slope...

Fantastic news! now if only the US would reinstate Glass-Steigal.
Of course at this point that'd be a relative detail for the floundering US economy, a deckchair on the Titanic.
But I digress. Doom wallowing aside, it really is a piece of good news. Every little bit helps. Thanks for posting.

In principal a great idea which I support completely..........

Unfortunately any requirement by the Chancellor will take upto about 2.5 years from now to enforcement from what I understand PLUS any legal wranglings that the banks might try to use to disrupt affairs....

I see HSBC moving out of the city of London and taking all it HQ to the Far East and Possibly Barclays might shift West (?) although I doubt the latter..

It's a shame the last lot of Incompetent Labour Idiots didn't move on this before and do something positive a while ago.......... it was all too easy then not to I suppose !!

The banks will also start to charge for a current / checking account from a 'ring fenced' retail bank..just watch..

regards

PDUK

This will just be used as an excuse for banks to start charging consumers more. I cannot see how this is a victory for the consumer/tax payer.