The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, September 12, 2011

Australian banks will end up riskier than UK banks

As proposed here for years, the UK Vickers' Banking Commission has embraced a thoughtful and prescriptive policy model enforcing a form of narrow banking on UK institutions. Australian banks will escape these regulations, which will invariably make them structurally riskier concerns with no quarantining of their core savings and loan activities. The FT reports:

"As foreshadowed, the central recommendation of the Independent Commission on Banking, chaired by Sir John Vickers, is that banks’ core operations – including consumer deposits and small business lending – must be ringfenced from the rest of their businesses. The ringfenced entity must have its own board of directors.

On capital, the commission held to its interim conclusion from April that the ringfenced entity must maintain equity capital equivalent to 10 per cent of risk-weighted assets."

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