There is a law proposal which contains the breaking up of Britain’s banks. The proposal is coming from the Governor of the Bank of England.
Splitting Britain’s banks means to separate retail banking from investment banks. This could cause a rise in risks because of the heavier capital requirements on riskier banking operations. The heavier capital requirements is forbidden by the international Basel Committee.
The chairman of the Financial Services Authority thinks that the law proposal is a bad idea because it could make the financial system even more fragile and so will the risks increase.
The UK government has refused the law proposal of the Governor of the Bank of England.
In my opinion it is good that this article explains why banks should not split up. Because of the financial crisis people have lost their faith into the financial branch, and a lot of them thinks that if banks should had only be active in what there should be active in, there would not be a crisis.
This article shows us that this point of view is wrong, you cannot classify banks. Banks have grown over the years and became stronger by offering several activities. We cannot break-up the banks because of the crisis, we would not recognize our financial system. I think that instead of breaking up the banks, it is better to exercise more supervision over the banks.
Posted by Sofie De Cooman
Source: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6485229/FSA-chief-Lord-Turner-warns-splitting-British-banks-could-increase-risks.html
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“Splitting or not splitting banks” is a topic of discussion between financial experts, not only in Britain but all over the world.
BeantwoordenVerwijderenAll experts agree that banks got far out of the way of their core business namely managing accounts, gathering savings and adjudging loans.
The tumult in banking of last year proves that banks aren’t longer able to assess the rate of risk of the structured and derivative products they are managing.
It could be a slight reassure that all experts agree that banking system needs new international rules in order to avoid a repetition of the financial crises.
Elise Van Praet