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The Vickers Separation Conundrum

I am sure we were all delighted to see that the government has fully adopted the Vickers Report !! Much focus has been placed on the business impact of separation but what does it mean in practice. Page 54 tells us what is mandated and what is prohibited in a ring fenced bank. Deposits, payments, lending (of all types) and advising on non risky products in a NON-ring fenced bank if done for individuals and SMEs. Everything else in a ring fenced bank. Easy - Job Done. 

Except that the outline is too simple from a product and technical perspective. For example where do I do my FX transactions as a consumer and as a medium sized corporation ? If I need to hedge my foreign exposure as a company, does that I mean need to work with two different types of financial institution ? As a private client where is the line drawn on my 'retail' and 'investment side' ? .... and .... and.... If project and trade finance are NON ring fenced then who advises on IPO, capital structures etc....(or is this included in underwriting in a ring fenced bank ?) 

More complex will be the division of systems. Part of the capital allocation referred to in Vickers relates to operational risk. However the systems are very intermingled. FX for example occurs on the retail side and the Capital Markets businesses. System are the same in many cases so are we talking about a complete segregation and duplication of some core systems (great for IB Tech companies) or what is the capital allocation model between institutions. 

If applied in its fullness the cost of Vickers will be exceptionally high for banks and exceptionally rich for consultants and technologists. 

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