Bank reforms to protect taxpayers
Jun 14 2012
Savers and taxpayers should never have to "take the pain" again when a bank fails under plans to overhaul Britain's banking sector, the Government has announced.
But there are fears the reforms will make it even harder for banks to lend to recession-hit households and businesses.
The Government estimates that the plans will cost the banking industry up to £7 billion a year and the wider economy as much as £1.4 billion a year.
Chancellor George Osborne's long-awaited banking White Paper aims to make banks safer for savers by ranking individual depositors above bondholders and corporate creditors when it comes to recovering cash owed after a bank failure.
The reforms will also create a ring-fence around the high street banks which handle consumer and small business accounts to insulate them from the risks run by "casino" operations within the same group.
But moves to broaden the range of activities allowed in ring-fenced operations led to accusations from Shadow Chancellor Ed Balls that Mr Osborne was "watering down" reforms.
There are also mounting concerns over the knock-on cost of the reforms. The Treasury estimates the White Paper changes will cost UK banks an initial outlay of £2.5 billion, followed by between £4 billion and £7 billion a year.
|Page 1 of 2||Next|