Independent Commission on Banking final report: recommendations
The Stationery Office, Sep 13, 2011 - Business & Economics - 360 pages
The Independent Commission on Banking's final recommendations aim to create a more stable and competitive basis for UK banking for the long term. The result would be a banking system that is much less likely to cause, or succumb to, financial crises and the huge costs they bring; is self-reliant, so that the taxpayer does not have to bear the losses that banks make; and is effective and efficient at providing the basic banking services of safeguarding retail deposits, operating secure payments systems, and efficiently channelling savings to productive investments in the economy. Stability is crucial and UK banks should have more equity capital and loss-absorbing debt - beyond what has so far been internationally agreed - and their retail banking activities should be structurally separated, by a ring-fence, from wholesale and investment banking activities. The Commission also address competition, which has not been properly effective in UK retail banking. They recommend a seamless switching system based on redirection for personal and small business current accounts, free of cost and risk, complemented by measures to enhance transparency. The new Financial Conduct Authority should have a clear duty to promote effective competition. Structural reform should be complete by the Basel implementation date of 2019 at the latest. These reforms would result in better-capitalised, less leveraged banking more focused on the needs of savers and borrowers in the domestic economy. At the same time UK banks would be free to flourish in global markets, but without UK taxpayer support.
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Economic impact and implementation 123
Assessment of the market 165
The economic impact of the Commissions ﬁnancial stability
GLOSSARY AND ANNEXES
Summary of responses to the Interim Report 253
Response to critiques of the competition analysis in
absorb losses activities assets Available bail-in bonds bail-in power Bank of England bank’s banking group banking services barriers to entry Basel beneﬁts building societies capital requirements challenger challenger banks Chapter Commission analysis Commission on Banking competition consumers creditors crisis current accounts customers deﬁnition depositor preference deposits difﬁcult direct debit diversiﬁcation divestiture economy effective efﬁcient entities equity requirements exposures ﬁnances ﬁnancial companies ﬁnancial stability ﬁnancial system ﬁrms ﬁrst G-SIB surcharge GfK NOP HSBC impact implicit government guarantee incentives increase Interim Report investment banking liabilities liquidity Lloyds TSB loans market share minimum mortgages non-ring-fenced banks ofthe ring-fence ofthis overdraft payments PCA market primary loss-absorbing capacity proposed reduce reﬂect reforms regulation regulatory resolution Response retail banking ring-fenced banks risk weights RWAs sector shareholders signiﬁcant signiﬁcantly SMEs sufﬁcient switching systemically important banks Tier 1 capital UK banks universal banks unsecured wholesale funding wholesale/investment banking