UK sets out new law to break up errant banks

[No Elephants]

UK sets out new law to break up errant banks



By David Milliken

LONDON | Mon Feb 4, 2013 1:57am EST

(Reuters) - British banks that fail to guard their day-to-day banking from risky investment activities will face being dismantled, finance minister George Osborne is set to say later on Monday.

Britain is in the midst of a big shake-up of its system of bank regulation in the wake of the 2008 financial crisis, when 65 billion pounds ($102 billion) of public money was needed to shore up Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L).

Banks are already expected to have to 'ring-fence' activities such as standard bank accounts and payments from riskier investment banking -- something which will hit major players such as Barclays (BARC.L), HSBC (HSBA.L) and RBS.

But Osborne says in excerpts of a speech provided by his office that he is prepared to go further and break up banks which fail to keep to the rules -- a key demand of lawmakers who reviewed government plans late last year.

"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," Osborne says. "In the jargon, we will 'electrify the ring fence'."

http://www.reuters.com/article/2013/02/04/us-britain-banks-idUSBRE91306720130204

Great news but "errant banks" is redundant.

[Enthusiast]

1. I agree that it is great news, if actually true.

Now if we would only employ a similar strategy here in the states. That has no chance of happening here.

[No Elephants]

2. When the U.K.s Gordon Brown was on the Daily Show, he mentioned that

Britain had taken over the banks when it bailed them out. Therefore they did not have our problems.

I am not sure what he meant exactly. Whatever he meant, it sounded better than our making sure they got their huge bonuses. Maybe eve more than they otherwise would have gotten, given their performance? Who knows?

I am not familiar with an industry that guaranties bonuses. In my world, if it's guarantied, it's salary, not a bonus. If it' a bonus, it is a reward for performance, at the discretion of the employer. And if don't like it, you can find another bank who will give you a bonus that is to your liking, assuming bankrupt banks are hiring at that moment.