Bank Governor supports breaking up banks

| October 26, 2010 | 1 Comment

Mervyn King, the Bank of England’s Governor, has expressed his support for breaking up banks - measures that would shake-up the UK’s banking industry.

Mr King’s comments come shortly after the Independent Commission on Banking (ICB) said it was looking at ways to increase competition and choice among high street banks.

One option could see existing banking giants broken up and new names enter the industry.

However, the proposals have met with concern from major banks.

Barclays president Bob Diamond warned that universal banks such as Barclays and Standard Chartered would face problems if the Government forced banks to break up.

Banking industry experts have argued that splitting up banks could damage the UK’s reputation as a global financial centre.

Meanwhile, some banks have hinted that they are looking to free themselves from stricter regulations, such as George Osborne’s £2.5 billion bank levy, by relocating.

Meanwhile, in a speech in New York, Mr King said that the proposed bank levy was not enough to tackle the problem of banks being “too big to fail”.

Banks are already facing stricter regulation with the Basel III rules. Banks are expected to look to capitalise around 7% under the new rules.

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  1. James Bryning says:

    Every time I read a statement by the governor of the bank he depresses me, my only comfort is that I am not alone in my interpretation as the markets soon after he has spoken collapse, if this is his intention he is succeeding if I where a hedge fund manager and I was awear of when next he was to make a statement I would back the market to fall the next day. perhaps you may oblige, !! Thanks

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