Ralph Silva
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Ring-fence will make banking 'more expensive'

The Chancellor George Osborne is expected to announce several radical changes to the banking industry in a speech to the City on Wednesday evening.

Firstly, he will outline plans to force banks to 'ring-fence' the retail parts of their business.

Hence keeping them separate from riskier parts of the business.

He is expected to set a timeline for the sale of Northern Rock - the mortgage bank nationalised at the start of the financial crisis in early 2008.

He will also demand banks hold more cash in their vaults to help protect against future losses -- more than the new international minimum of 7%.

Ralph Silva is a banking expert from SRN Research and he told the BBC that the ring-fence means banking will become more expensive for all of us.

  • 15 Jun 2011