Reactions to the ICB's Final Report


Reactions to the highly anticipated final report from Independent Commission on Banking Commission have been wide-ranging, fast and in some cases downright furious. 

The BBC’s Robert Peston has called the proposed reforms the most “radical of British banks in a generation, and possibly ever”, while Mark Littlewood of the Institute of Economic Affairs dismissed the report and said “Vickers’ proposals entirely miss the point.”

The City of London Corporation cautiously welcomed working with government to help implement reforms, though it was not without reservations.

The Lord Mayor of the City of London, Michael Bear, said: “The City looks forward to working closely with government to ensure that any reforms are sensibly implemented in a way that delivers a safe and secure banking system without damaging our international competitiveness.”

Regular LondonlovesBusiness.com contributor and policy chairman of the City of London Corporation Stuart Fraser warned that the new capital measures proposed could damage the economy’s growth.  “The separate capital structures required by ring-fencing will increase the cost of lending for wholesale operations and one report has already indicated that it could reduce economic growth over time by 0.3% – a considerable amount in these tough times. And, as the ICB has noted, it will cost the banks up to £7bn.”

Dr Neil Bentley, CBI deputy director-general, pointed out that increased costs for the banks could well impact on businesses: “The proposals on capital requirements are out of step with internationally agreed measures underway so will increase the cost of lending for UK businesses, putting them at a disadvantage to their overseas competitors.

“The UK needs a stable and resilient banking system, but it is critical that the government implements these reforms in a way that supports lending to businesses and helps growth.”

The British Bankers’ Association’s response was fairly neutral: “UK banks are well on the way to implementing the sweeping reforms already brought in and expected to be brought in by UK, EU and global authorities to make banks and the system safer and to ensure that banks can fail in the future with savers and taxpayers protected and the supply of finance to the economy maintained.

“Any further reform measures adopted by the UK authorities need to be carefully analysed and compared with those agreed internationally. It is vital that the full impact any further reforms will have on the economy, the recovery and banks’ ability to support their customers in the UK is understood.”

John Walker, national chairman of the Federation of Small Businesses, was more outspoken. “The banking sector cannot be too big to fail as the taxpayer cannot afford another bank bail-out. The government has a golden opportunity to reform the banking sector and it must stand by the promises that it has made.

“The recommendations that the ICB make must be looked at closely and the government must act on them as soon as possible and ensure they are completed before the end of the next general election. The government must use this once in a lifetime opportunity to make the banking sector safer, more competitive and less burdensome on the taxpayer.”

Read our round-up of the ICB reforms