The Independent Commission (ICB) on Banking said that UK customers will have to pay more for availing the safety from the effects of any future financial crises. The Chairman of the Commission Mr. John Vickers said that the proposal presented will partly affects the banks’ profitability, remuneration of banking staff and also will partly affect costs to final consumers.

British banks will have to separate their divisions in retail deposit and investment banking, to save the ordinary money savers from risks due to future financial crises. The commission recommended the creation of measures, policies and procedures of enforcing future losses on bank bondholders.

The country’s largest banks, who had given arguments for moving abroad, were warned against their plea of moving abroad. The banks were also told to carefully consider the implications of relocating to any other country.

The Commission Chairman also said that, any such attempt of changing jurisdictions would not be much appreciated by their customers; and the banks should consider the after- impacts of any such moves.

Clare Spottiswoode, a member of commission, said that the depositors of banks leaving the jurisdiction would be more concerned about safety of their deposits due to unavailability of this protection.

The Commission proposed that Banks will maintain a Minimum Capital equity base of 10pc or 10pounds of shareholders’ equity for every 100 pounds given as loan. This level is quite above the 7pc suggested by basel III rules introduced last year.

The reports also depicted the need for more competition in the UK retail banking marked and Lloyds Banking Group, Britain’s largest retail bank. In case of Commission’s recommendations implemented, the bank would have to dispose its many branches.

On the other hand the LBG has strongly criticized the proposal given by Independent commission. According to the Bank’s officials expansion of divestment beyond agreed limit is not in the best interest of their customers.

The British Bankers Association has also commented that the report contains very significant options and suitable time should be given, in order to carefully consider the costs involved and its impact on the economy as a whole.

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