Belfast Telegraph

Ireland's mistakes to aid bank reform

The UK authorities are reforming their banking system based in large measure on mistakes that caused the Irish Republic's financial crisis, a key report claims.

The 'Vickers report', written by economist John Vickers, sets out a number of measures to reform UK banking, including possible writedowns for bondholders, ring-fencing sensitive parts of the banking system and reducing the dominance of certain groups by ordering branch sell-offs.

The report was dismissed this week as nothing more than "tinkering'' by government critics, as it did not order the formal separation of investment banking from retail banking.

The experience in Ireland over the past three years has been pinpointed by the author as giving the UK pause for thought about preventing future crises there.

"Had the asset quality of UK banks turned out to be as bad as in Ireland, the hit to the UK's fiscal position would have been significantly worse.

"If the public finances become unable to bear the costs of bailing out a failing banking system, the 'too big to fail' problem becomes a 'too big to save' problem,'' Mr Vickers said.