LONDON mayor Boris Johnson, a staunch defender of the City, has said that he supports a form of ring-fencing, or subsidiarisation, of banks’ activities to promote financial stability.
The mayor was speaking a day before the publication of an interim report by the Independent Commission on Banking (ICB), which will release its initial findings this morning.
Boris’ support for subsidiarisation, whereby a bank hives off certain activities into a separate legal entity, thrusts him into the charged political atmosphere surrounding the ICB’s report.
The ICB will deliver its final recommendations to the Cabinet Committee on Banking in September, which includes both chancellor George Osborne and business secretary Vince Cable.
They will be in charge of implementing its findings, although they are not formally obliged to accept any of them.
While Osborne is believed to be more sympathetic to banks’ concerns about a level playing field internationally, Cable has in the past stated his preference for a full-scale break-up of retail and investment banking, calling the latter “casino” banks.
His harsh language was echoed by Liberal Democrat Danny Alexander, first secretary of the treasury, yesterday.
Alexander said: “Our priority as a government is to make sure that those people who recklessly gambled with our economy are no longer able to be bailed out by taxpayers... those people who engage in that sort of casino banking (should) take responsibility for themselves.”
Implementing the report is likely to open divisions in the coalition, with senior Liberal Democrats anxious to show they are taking a tough line on banks.