CREDIT ratings agencies Moody's and Fitch have declared that Sir John Vickers's bank reform plan has no immediate implications for the sector but could have a negative impact over the longer term.
Both agencies said the Independent Commission on Banking’s proposals, which will see retail and small business banking ring-fenced from higher risk activities, will not trigger any immediate downgrades because full implementation will only happen in 2019.
But they warned that the reform deal will be bad for bondholders over the longer term because it removes implicit Government support for UK banks.
Fitch said that Royal Bank of Scotland, which is 83%-owned by the taxpayer and 41% state-backed Lloyds, owner of Bank of Scotland, would be most affected.
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