Ruth Mitchell

Radical reforms to UK banks

The Independent Commission on Banking has called for banks to ring fence their retail banking divisions to protect them from their investment businesses.

It is hoped that the firewall will protect key activities for individuals and businesses.

The BBC reports that if the changes come into place, it will be the biggest banking shake up for a generation.

While it is anticipated that most of the banks will hate the proposed reforms, chancellor George Osborne has already described the report as a “good” one because the banking industry had to change,

The report also recommends that banks create a loss absorbing capacity of between 17 and 20 percent of risk-weighted loans and investments.

The cost to the banks of making these vital reforms has been estimated at between £4 billion and £7 billion.

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