Independent Commission on Banking

Banking Shake-up May Be Costly for Small Businesses

Ring-fencing the UK’s retail banking system could increase the costs of lending for small firms, business groups have warned. A report (PDF) by the Independent Commission on Banking (ICB), headed by Sir John Vickers, has set out a series of key recommendations including ring-fencing the banks’ high street operations ― such as loans and overdrafts for small firms — in order to protect them from riskier investment banking divisions. Banks would also be required to set aside more cash to cushion them from future losses. In addition, the report proposed increasing the competition between banks by making it easier for customers to switch providers. The protective measures are designed to “make it easier and less costly to resolve banks that get into trouble” ... »