Doing the splits
When is a split not a split? When it’s a subsidiary, of course. We learn this morning that the Vickers Banking Commission will not recommend a complete, Glass-Steagall-style separation of retail and investment activities. But it will advise that banks erect some sort of barrier between the two, to ensure that everyday savers’ (and taxpayers’) cash isn’t risked by the Masters of the Universe. Specifically, it will propose that banks create subsidiaries out of their investment arms. Those subsidiaries could then go bust without, in theory, affecting the retail half of the equation. As Robert Peston explains, there are two ways of implementing these subsidiaries — and the Vickers Commission
