Banks to separate retail and investment arms

12th Sep 2011 07:07

British banks should separate their retail banking and investment banking divisions, the government-appointed Independent Commission on Banking (ICB) has said, adding that they should be given more than seven years to implement such reforms.The report was welcomed by the government, which said: "It considers it to be an impressive report and an important step towards a new banking system."Lloyds Banking Group said it was "assessing the full implications of the report and may provide a further update to the market once we have had the opportunity to review the report in detail."The ICB also said that banks should hold core capital of at least 10% in their retail banking operations and that the reforms would cost the British banking sector between £4bn and £7bn to implement.The ICB was set up to examine ways to prevent taxpayers being hit by banking crises. The 2008/09 financial crisis resulted in the government taking large stakes in RBS and Lloyds.---RG