The British government has unveiled details of new laws intended to dissuade banks from taking risks hat lead to them having to be bailed out with taxpayer money.
Responding to public anger, finance minister George Osborne said they would force banks to sell their investment arms if they fail to shield their day-to-day banking from risky investment activities: “My message to the banks is clear. If a bank flouts the rules, the regulator and the Treasury will have the power to break it up altogether; full separation, not just a ring-fence. We’re not going to repeat the mistakes of the past.”
Osborne said the new laws – which he wants to be in force early next year – could include directors of failed banks being chucked out of the industry.
Big British lenders have warned they will be left at a disadvantage against continental rivals because of what the government is planning, but the Fitch ratings agency said the legislation could improve the credit profile of the UK’s high street banks.