the Market Soul © 1999 - 2011 Headlines

Monday, 19 September 2011

Get your calculators out

Very recently the Independent Commission on Banking (Vickers Commission) published its long anticipated, yet low in surprises report on Banking Reform in the UK.

Rather than rehash the analysis already performed, we only have two items to add at this stage:
  1. Get your calculators out, or at least keep the Quants busy, because unravelling and implementing reforms are going to cost a lot of money (and we all know who pays for that at the end of the day)
  2. How do we create the ‘Imperfect Competitive’ markets or at least address Oligopolistic Competition more effectively?
In a fiercely competitive international  market space the desire to aggregate banks and financial institutions and hence reduce cost economies of scale at the expense of risk accumulation is overwhelming. (Which the discredited Sir Fred Goodwin ex Chief Executive of Royal Bank of Scotland [RBS] can testify to only too well)

Let’s hope the Vickers Report is not the start of the death knell of the UK financial services sector; or perhaps in a cynical way, that is exactly what is (intended) needed to address the UK’s long-term structural reliance on the financial services sector at the expense of a more balanced portfolio of productive output and activity.

theMarketSoul ©2011

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