Whilst the full details have yet to be published it would appear that moves are underway to create a “division” between the retail and investment side of banks operating in the UK.
The retail side will manage deposits along with loans, mortgages, and related products for the UK consumer and businesses. The investment side will contain the areas considered to be more risky such as trading on derivatives, etc.
This should reduce the risk for the retail side of banking however there are some who question whether the banks will be able to maintain an effective division between the retail and investment banking entities when they are managed and owned by the same company.
One of the negative factors being put forward by the banks is that the proposed changes could undermine lending and effectively make consumer creidt more difficult to obtain. Clearly this is not a view shared by the Government as availability of sustainable credit is fundamental to economic growth.
It will be interesting to see how this plays out.
