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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.

Green Box: Cable cool on bank split callClick to open

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