LONDON Oct 31 (Reuters) - Banks could leave the UK if they are asked to fully separate their retail and commercial arms from their investment banking activities, Martin Taylor, one of the authors of a government-commissioned review of the industry told lawmakers.
The Independent Commission on Banking recommended lenders formed barriers between their retail operations and riskier investment arms to protect ordinary consumers better in future crisis. However, it stops short of recommending a full separation.
"Had we mandated full split one or two banks could reasonably have asked themselves whether they ought to move," Taylor told the Parliamentary Commission on Banking Standards on Thursday.
Taylor added that having a ring fenced retail bank would give the benefits of simpler supervision without going all the way to a full split.