To ring fence or not ring fence?

There is an active debate going on in the City this week which is directly related to the future of corporate governance for banks: the issue is of course ring-fencing retail banking from other banking activities.  Ring fencing not only raises huge governance issues (i.e., independent chairmen and a majority of independent directors), but also operational ones such as IT/systems and also legal issues (structural consequences, which could have immediate rating agency consequences for the rump wholesale arm).   

On one side of the debate is Sir John Vickers who is quoted in today's Sunday Times that ring fencing is done deal. Effectively, it is too late to not implement the structure and the case remains as strong as ever for this change, so says the Vickers et al. crowd.  On the other side, another respected governance player, Sir David Walker has argued that this approach is no longer sensible given all the other changes that have subsequently been introduced on capital and leverage - see my blog comment from June 6th or a view from Banker at:http://www.thebanker.com/Editor-s-Blog/Ring-fencing-raises-fresh-challenges-for-UK-banks?ct=true.

It sounds like authorities need to decide a criteria to resolve this debate, as not deciding means the pro ring fencing crowd wins.  I note the bank levy is another issue on the table here.  One complication is that the current version of ring fencing is not universally followed by American nor European regulators (whom have their own thoughts and structures in implementation, such as Dodd Frank in the US).  

I generally don't like different sets of rules for different banking systems - it can lead to threats of leaving one jurisdiction for another at best and regulatory-driven reshuffling at worst.  So on that basis alone and only by this measure, I would probably favour amending the ring fencing as we climb ourselves out of poor global growth and the regulatory playing field is clearer. But much like other observers, if the facts change then I will reserve the right to reconsider!