VICKERS REPORT

Vickers Report

Vickers Report

The British government announced its response to the recommendations in the report of the Independent Commission on Banking Vickers (ICB, for short) to strengthen the banking sector in the UK. With this report, is put into practice our intention to implement the commitments made by the European Union and the G20 to eliminate implied warranties (for the taxpayer) of the banking sector and ensure that financial institutions will never be "too big to fail".

The UK is a strong supporter of full and accurate implementation of the minimum standards established in the Basle Accord 3 to boost mandatory levels of capital banks must have the package of additional requirements apply to systemically important financial institutions, and new international standards for crisis resolution schemes. However, to obtain conclusive results and eliminating the implicit guarantee of the taxpayer, the UK now go beyond the provisions of European legislation, accepting a far-reaching structural reform of the banking system and prudential measures that exceed the standards European and international minimum.

That is why the government has accepted the report's recommendation to introduce Vickers radical reform of the banking sector in the UK, establishing a legal and operational separation between the activities of commercial banking and investment banking. This will facilitate an orderly resolve without recourse to the taxpayer, any future bailout. This separation will be accompanied by the following measures: minimum capital requirements higher: 10%, in the case of systemically important banks (in the European legislation the minimum is lower: 7%), a minimum requirement of at least 17 % capacity to absorb losses of the major banks, a new mechanism of "rescue" legally regulated to ensure that any loss from a future crisis is borne by private investors and not by taxpayers, and measures to strengthen competition within the British banking sector.

The economic origins of the report

Vickers wondered about the forms of structural separation. He did not mention, however, the breakdown of universal banks, which was called before one of the leading politicians of the liberal-democratic and current Minister of Economy, Vince Cable. The most important one in this context was 20.X.2009 speech in Edinburgh. The then Prime Minister, Gordon Brown immediately distanced himself from him, applauded him and said Mr. Osborne, who was finance minister in the shadow. In the British press, such unanimity rule is not a coincidence but the result backstage inspiration. The main suspects but did not admit guilt. It is possible that such inspiration came from the banks, which depend on the heating of the atmosphere.

Many of the ideas and themes presented by the Commission's analytical Vickers - though not the form of separation of different functions of banks - in fact, derives from this Scottish King's speech. At this inspiration Vickers but never pointed. When asked about this directly, one of his colleagues Financial Observers said that working with the president of the Bank of England was excellent. The crisis has also seriously weakened the competition, as smaller banks, or descended from the scene or were absorbed by the ...