That's a statement that raises two important questions. Firstly, it will have profound effects on banks' prospects, and therefore on their share prices. It's unlikely that UK banks will ever recover to become the leviathans they once were, especially as it seems that a fair chunk of their boom year profits were obtained by either recklessness or downright dishonesty. Curtailing - rightly - such practice suggests that banks will once again become boring, low growth businesses, and that weakens the case for buying bank shares, as we explain in more detail in this week's sector focus.
Secondly, I wonder whether the 'monoculture' that is British banking industry really has it within itself to change, even if it does have a more ferocious regulator breathing down its neck than the FSA of old. Bonus culture, for instance, will be hard to eradicate. Even in front of a recent Parliamentary Commission Barclays' new chiefs – supposedly among the men that will restore faith in British banking - couldn't resist trotting out the line that you needed to pay top dollar to attract the best people, when evidence so often suggests otherwise. And as likely head of the Bank of England's Prudential Regulation Authority Andrew Bailey suggested earlier this year, banks have become 'too big to prosecute', with fines for malpractice simply a cost of doing business. Don't they just know it.
This does not, of course, mean banks are untouchable - customers can express their disgust simply by moving their money, and many are. There are an increasing number of non-traditional banking options, not least supermarkets who are somehow able to offer products far more attractive than their mainstream rivals'. And in a delicious irony, the FSA gave authorisation, and therefore inclusion in the Financial Services Compensation Scheme that protects bank deposits, to crowdfunding-provider Crowdcube on the very same day as Osborne's address. That’s just one option that customers, let down by paltry saving rates, or small businesses let down by their lenders, have found to circumvent the big banks.
Similar alternatives such as peer-to-peer lending will continue to grow, too, as they become more trusted and are regulated, and because banks' egregiousness has been as present on the high street as it has in the ivory towers of Canary Wharf. "Electrifying" the ring fence, as Mr Osborne put it, doesn’t make a lot of sense if your cows are already in your neighbour's field.
