Costly ring-fencing to protect consumers from investment banking risk casino might have made the British creditors are more likely to collapse, not safer.
Analysts at UBS said that the sale of freestanding retail banks Barclays and others will not benefit the customers.
They argued that these changes increased the chances of the “liquidity crisis” in the UK similar to the financial crisis.
Ring-fencing, under control of the city regulators have left banks less flexible and not able to reallocate capital easily in the economic downturn, says UBS. He added: “over £3 billion in restructuring costs incurred by the big five banks, we think that the affected firms remain less competitive and efficient are likely to give up their share and the vulnerable in the economic downturn.”
The Finance Ministry has defended the segregation policy
Reforms will lead to smaller investment banks and the pressure on Bank shares, according to the Swiss Bank.
Fencing has already been completed, such as Barclays, RBS and lloyds, with HSBC and santander to follow suit before the deadline in January. One of Barclays spent £1 billion in the course of 24 million customers, £250 billion of assets and changes in million of sort codes.
Rules designed to protect consumers and businesses from the consequences of another financial crisis. According to the regulators, if an Investment Bank fails, the associated retail Bank will have its own capital and separate system, and remain safe.
The Finance Ministry defended the policy. “Fencing protects the deposits from everyday customers, reduces the likelihood of financial crises in the future and if the Bank does not guarantee that the taxpayer is not on the hook” – said the Agency interlocutor.
Former Minister for business and liberal Democrat leader Vince cable said: “We have to make sure that these bad banking behavior in the end. There can be no return to the bad old days”.
Finance UK, which represents UK lenders, said: “the industry works with regulatory bodies to ensure these changes are brought on time and closely monitor their effects”.