Banks may still be split, says Cable

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Media captionVince Cable says: 'We can't wait for another banking crisis to cause more damage'

Business Secretary Vince Cable has said banks could still be forced to separate their high street operations from their investment banking divisions.

A government-commissioned report proposed in April that the two different arms should be ring-fenced.

But Mr Cable said the coalition could yet go further if certain tests showed ring-fencing was not the best option.

The government will make a final decision after the independent report delivers its conclusions in September.

In its interim report in April, the Independent Commission on Banking (ICB) stopped short of recommending splitting up the banks.

"The government will be seeking reassurance from the final report in demonstrating that a ring-fence can be as effective as full separation at lower cost," Mr Cable said.

"The key test will be: would it stop banks using deposits underwritten by the taxpayer to cross-subsidise their other activities, the so-called casinos?"

"Will the division between what is inside and outside the ring-fence ensure that nothing resembling a universal bank remains?"

Mr Cable has been a long-time advocate of splitting up the banks, arguing this would be an effective way to help avoid a repeat of the 2008 financial crisis by protecting retail banking arms from losses made by investment-banking divisions.

The government is under no obligation to implement the ICB's recommendations.

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