A new UK Banking Commission has been set up that could threaten the very existence of big banks on UK shores.
The Independent Commission on Banking (ICB), made up of five regulators, has been established to examine financial stability, levels of competition, and general “hard questions” in a wide scale investigation that could lead to big banks being broken up.
The UK Government created the ICB three months ago following the financial crisis that led to financial groups requiring bailouts from UK taxpayers.
Chairman of the commission, Sir John Vickers, said: “Experience shows that the risks from not asking hard questions about financial stability and competition are far greater than from doing so. Questions about the structure of banking need to be debated in an open, rational way, and we would like to invite anyone with an interest to provide us with views and evidence.”
According to ICB papers they will be looking into the prospect of splitting banks’ retail and investment divisions, limiting investing and proprietary trading, introducing fee structures and rebuilding a market wide infrastructure.
However, there are concerns that big banks could simply move away from the UK in the face of intense scrutiny. In the past Standard Charter, Barclays and HSBC have all warned that they would think about leaving the UK if regulations were increased.