Today's Sunday Times reports that there may be progress made on the issue of ring fencing of UK banks. The Vickers Commission proposed ring-fencing as a means to insulate the banking sector and broader economy from another crisis whereby retail and wholesale banking activities would be legally separated with unique asset, liability, operational, and corporate governance structures.
The Times is now suggesting that the BOE may be willing to consider a compromise or at least some flexibility on the governance point (i.e., perhaps allowing one board to oversee both sets of activities). However the retail board would still have an over-riding say on critical periods such as when banks face resolution. Critics have argued that separating monitoring and governance roles of the two activities could led to un-welcome decision-making and undermine board of director accountability to investors. Let's watch this space!
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