Vickers Report seeks banking reform by 2019

BANKS should ring-fence their high street and investment divisions by 2019, a government-appointed commission said today.

The move  would be designed to “make it easier and less costly to resolve banks that get into trouble” and without taxpayers’ help, the Independent Commission on Banking (ICB) said.

ICB also said the Government should ensure Lloyds Banking Group’s planned sale of 632 branches leads to the emergence of a “strong challenger bank” – but fell short of recommending that more branches should be sold.

The Manchester-based Co-operative Group has already thrown its hat in the ring for the Lloyds branches, but may face competition for the deal.

Report author Sir John Vickers and his fellow ICB members said the proposals – which will cost UK banks around £4bn to £7bn a year to put in place – will “put the UK banking system of 2019 on an altogether different basis from that of 2007”.

The ICB was set up last year to look at how taxpayers could be protected from future banking crises. The 2008 credit crisis resulted in the government nationalising Northern Rock and part-nationalising the Royal Bank of Scotland and Lloyds .

The taxpayer now has stakes of 83% and 41% in RBS and Lloyds, respectively.