Independent Banking Commission Report Debate

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Department: HM Treasury

Independent Banking Commission Report

William Bain Excerpts
Monday 12th September 2011

(13 years, 1 month ago)

Commons Chamber
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George Osborne Portrait Mr Osborne
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My hon. Friend is right to raise the issue of competition in the investment banking sector. It is not often talked about outside the pages of the Financial Times, but it can be very uncompetitive, the fees can be exceptionally high, and there is that old maxim that no one ever got fired for hiring Goldman Sachs. The report will enable Britain to remain a home of competitive investment banking while protecting retail customers. That should encourage new entrants and drive down the fees that are charged. That would all be a good thing.

William Bain Portrait Mr William Bain (Glasgow North East) (Lab)
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In the first six months of this year, the five major UK banks lent £63 billion to non-financial corporations, excluding small and medium-sized enterprises. The Vickers recommendations would not oblige the banks to protect that lending via the 10% capital requirement for retail banks within the ring fence. Does the Chancellor agree with that recommendation, which would contribute to up to two thirds of all bank balance sheet holdings being outside the protection of the ring fence?

George Osborne Portrait Mr Osborne
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Again, I think we should trust the judgment of John Vickers and his commissioners. They explicitly considered whether to prescribe more closely than they have the scope of the ring fence—I am not talking about the height now, but the scope—and whether to include lending to larger corporates inside or outside it. They decided to leave that open to the banks. We will consider that advice and recommendation, but it strikes me as quite sensible to have some flexibility about the scope, if not necessarily the height, of the ring fence.