George Osborne has endorsed the Sir John Vickers’ Independent Commission on Banking. In a statement to the Commons, he called it an “impressive piece of work”.
The report, set up by the coalition, outlines a series of regulatory changes due to come in to effect by 2019, including the ring-fencing of investment and retail arms of the banking sector.
“We are fundamentally changing the system of regulation and tackling the debts,” said the Chancellor.
He referred to the banking bailout, which included RBS and Lloyds, as the element of the financial crisis that “caused the most anger”.
“It is an affront both to fairness and to the very principles of a market economy.
“It is not available to any other sector of the economy, and nor should it be.
“It breaks the principle that those who take risks should face the consequences of their actions,” he said.
Alongside the ring-fencing, other recommendations include ensuring banks have bigger cushions to withstand losses, and the encouragement of more competition on the High Street.
“This Government wants Britain and the City of London to be the pre-eminent global centre for banking and finance,” he said.
“We want universal banks headquartered here, with all the advantages that brings.
“The Vickers report explicitly addresses this issue – and for those investment banks with credible recovery plans they have not recommended higher equity requirements than those agreed at an international level.
“This would mean that the global investment banking operations of UK banks can continue to be as competitive as any in the world.
“And we will continue as a Government to keep the City as a whole internationally competitive, as was clear last week when we welcomed, with the Chinese government, the development of the offshore RMB market in London.”
Following the Chancellor’s comments, Shadow Chancellor Ed Balls said he was “deeply sorry” for the previous government’s role in failing to regulate the banks before the crisis.