ICB: speech by Sir John Vickers on how to regulate the capital and corporate structures of banks

Independent Commission on Banking

The Independent Commission on Banking was created by the UK government in June 2010 and is chaired by Sir John Vickers. The Commission's role is to consider reforms relating to the capital and corporate structure of the UK banking sector to promote financial stability and competition.

On 22 January 2011 Sir John Vickers made a speech at the London Business School about the Commission's work. He put forward two questions to be addressed by the Commission in its review:

(i) whether, and if so how, structural reform of systemically-important institutions might affect appropriate levels of loss-absorbing capacity. If the probability and/or impact of bank failure particularly of retail service provision can be reduced by forms of separation between banking activities, then so too might capital requirements. If so, the case for structural reform might be greater given the higher the cost of bank capital.

(ii) whether, and if so how, structural reforms might relate to other reform initiatives, especially the credibility of banks' recovery and resolution plans to cope with crises.

Date

January 22, 2011