UK bank reforms need sharper probe -parliament body

LONDON, July 20 Wed Jul 20, 2011 4:30am EDT

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LONDON, July 20 (Reuters) - Britain's Independent Commission on Banking (ICB) needs to sharpen its probe into its proposed reforms for the sector, such as ring-fencing retail banks, parliament's cross-party Treasury Select Committee said on Wednesday.

Britain set up the ICB last year to examine reforming a sector that was badly damaged by the credit crisis, resulting in the nationalisation of Northern Rock and part-nationalisation of Royal Bank of Scotland and Lloyds .

In its interim report, the ICB proposed ringfencing banks' retail operations from their riskier investment banking arms, to shield taxpayers from future crises. It also called on banks to hold more capital.

However, the Treasury Select Committee said the ICB -- headed up by Oxford University academic John Vickers -- had not addressed certain areas in enough depth, such as corporate governance issues or a full split of the banks.

"The failure to address the issue of corporate governance was a serious omission in the ICB's interim report. It must be tackled head-on in the final report," committee chairman Andrew Tyrie said in a statement. (Reporting by Sudip Kar-Gupta; Editing by David Holmes)

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