The ICB’s ring fence
Context and consequences
The ICB published its final report in September 2011 after more than a year of evidence gathering and consideration. The report’s key recommendation was that retail and SME savings and overdrafts in systemically important banks which currently combine wholesale and investment banking operations must be ring fenced. This proposal was buttressed by requirements for banks to hold more capital and to make provisions to facilitate their own orderly failure. The proposals have been endorsed by the Government and are likely to be implemented more or less in full, European Union regulation permitting.
The ICB’s proposals for protecting taxpayers against bank collapses will change the face of UK banking. This paper looks at the potential impact through examining the proposals in the context of the wider regulatory change.