Banks risky investments to be ring fenced

| 10/04/2011

(BBC):An interim report from the Banking Commission due on Monday will not support the total break-up of Britain’s biggest banks, the BBC understands. Instead it will favour ring-fencing their risky investment banking operations, so they do not jeopardise the savings of ordinary depositors. The move will still cause anger at big banks like Barclays, according to BBC business editor Robert Peston. It means their investment banking units will find it more expensive to borrow. "I understand that the Commission will recommend that within megabanks like Barclays, HSBC, or Royal Bank of Scotland, new legal barriers – or ‘firewalls’ – should be constructed," our correspondent said.

"So that if a crisis occurs in the investment bank it can’t hurt our savings in the retail bank."

Danny Alexander, Chief Secretary to the Treasury, declined to comment on the report’s details ahead of official publication. But he told the BBC’s Andrew Marr programme on Sunday that the government would put the interests of taxpayers’ ahead of the interests of banks when considering a bank restructuring.

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