A recent report from the UK Government is all set to limit the retail
operations of UK banks from their investment operation department. The
plan detailed in the banking reform white paper which aims at
safeguarding the deposits of retail customers with taxpayer money
should there arise any situation where a bank breaks down as a result of
riskier investment activities.
Now, the called reforms will have a detrimental effect on various parties involved in the banking activities and also the business of banking as whole. What effect it could have is that these profits from investment transactions would not be used to subsidize the retail banking operations. This means a higher charge of retail banking services for the consumers. This shall make mortgage finances/mortgage loans expensive, as the rate of interest charged on them will increase.
Also what is proposed under the policy is that the banks in UK shall have to keep a reserve of 17% capital as a safeguard should there occur any losses from risky investments. The brunt for the same shall have to be bored only by the ordinary customers.
Today the mortgage industry is in a colorful period enjoying the benefits of getting more consumers to be home owners by allowing home mortgage finance. Since, the renting price in UK is already on a high range; retail banking is attracting consumers by serving them options of owning home at low interest rates.
However, this booming trend is facing a challenge from the abovementioned banking reform policy by the government. The proposed policy measures will have beneficial aspects for savers and the proposed measures are not disadvantageous in least sense, but, the other side should also be considered and accordingly the policy measures me initiated and implemented, such that positively affects all the stakeholders I the economy.
Now, the called reforms will have a detrimental effect on various parties involved in the banking activities and also the business of banking as whole. What effect it could have is that these profits from investment transactions would not be used to subsidize the retail banking operations. This means a higher charge of retail banking services for the consumers. This shall make mortgage finances/mortgage loans expensive, as the rate of interest charged on them will increase.
Also what is proposed under the policy is that the banks in UK shall have to keep a reserve of 17% capital as a safeguard should there occur any losses from risky investments. The brunt for the same shall have to be bored only by the ordinary customers.
Today the mortgage industry is in a colorful period enjoying the benefits of getting more consumers to be home owners by allowing home mortgage finance. Since, the renting price in UK is already on a high range; retail banking is attracting consumers by serving them options of owning home at low interest rates.
However, this booming trend is facing a challenge from the abovementioned banking reform policy by the government. The proposed policy measures will have beneficial aspects for savers and the proposed measures are not disadvantageous in least sense, but, the other side should also be considered and accordingly the policy measures me initiated and implemented, such that positively affects all the stakeholders I the economy.
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