Banks still angry over Vickers despite small firms concession

GEORGE Osborne is expected to give ground over regulation of certain areas of small business banking this week, but banks are still angry about his plans for a so-called depositor preference.

The chancellor is set to indicate a willingness to allow banks to offer some simpler hedging tools within their ring-fenced retail arms, when he outlines his plans to implement the reforms set out by the Vickers commission during Thursday’s Mansion House speech.

Banks are concerned that depositor preference rules will push up the costs of wholesale funding and do little to stabilise the economy in the event of another crisis.

The Treasury, which declined to comment, will press ahead with the depositor preference and plans to introduce draft legislation based on the commission by the autumn.