'It is not enough' to separate retail and investment banks

17 March 2011

It is not enough to separate retail banking operations from investment banking activities in order to improve the fairness of the banking system in the UK, it has been claimed.

Speaking on BBC Radio, chairman of the Financial Services Authority Adair Turner suggested helping banks out in this way is not practical.

The industry figure said: "I think what is absolutely clear is we cannot rely on the idea that if one of these big banks get into trouble we can resolve it smoothly."

He claimed banks should instead attempt to triple the amount of capital they are setting aside for 2013 in order to provide a safety net for the financial system.

While amounting these figures, the institutions need to keep moderating their dividend payments, Mr Turner added.

UK shadow chancellor Ed Balls recently urged the government to introduce an additional £2 billion ($3.2 billion) tax on bankers' bonuses, Reuters reported.

By Claire Archer

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