My Lords, I, too, welcome the Government's endorsement of the requirement for high-street banks to better capitalised. However, I share the concerns of the noble Lord, Lord Higgins, about the efficacy and efficiency of ring-fencing, as opposed to total separation. As the Minister will know from his time in the City, banking groups are funded and the Treasury is run on a group basis. To separate the groups and deal with permeability will be extremely difficult. A legal separation would reduce, if not eliminate, the risk of inter-group contagion. It would also allow the risks of the high-street bank and the investment bank-or whatever the Minister chooses to call it-to be properly priced. This would benefit the ordinary consumer. The lower cost of borrowing that a better capitalised high-street bank paid could then be passed on to the borrower.
The second issue that arises on this is, again, a welcome commitment to apply this right across the banking industry. However, many of our banks are headquartered in other countries. Have the Government had any discussions with the Governments of, for instance, the United States and Spain? Do they share the Government's enthusiasm for this approach? Will the Government also ensure that the lead regulator-whether in the United States or in Spain-will follow the same path?