Government softens on breaking-up banks

Katrina Lloyd
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The Government is unlikely to push for the break-up of the UK's major banks and instead will favour new guidelines to govern the relationship between retail and investment arms.

Speaking to The Daily Telegraph, new business secretary Vince Cable said he recognised "the seriousness of the problem and the danger of unintended consequences" of draconian measures. He acknowledged introducing new capital and liquidity rules too early would "reinforce lending problems in the economy". "There is an inherent dilemma in making the banks more safe and in getting lending to support the real economy," he said. In its policy document last week, the coalition government pledged to "establish an independent commission to investigate the complex issue of separating retail...

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