As we approach publication of the final report in September of the Independent Commission on Banking, chaired by Sir John Vickers, the banks have indicated their opposition to a full-scale separation of retail and investment banking (on the lines of the US Glass-Steagall Act which served pretty well until 1999) and a more limited "firewall" between such operations within the same legal entity (which the Treasury seems to favour).

You report that RBS may be softening its stance on the latter to focus on how such separation could be made to work (“RBS ‘ring-fence’ plan”, The Herald, July 13).

No doubt we should be grateful for small mercies, but almost three years since the downfall of RBS and HBoS, and four since that of Northern Rock, one might have hoped for the industry to have proposed its own reforms long before now; but so be it.

Could it now inform us whether its proposals would allow a failed bank to go to the wall without its retail customers suffering and without causing a domino effect? Never again would the industry in general be able to cause a global or even a UK economic recession, and never again would three generations of taxpayers have to bail them out.

Or is the form of free-enterprise capitalism which such bankers purport to believe in, and which they adduce to justify their remuneration, really based on no more than a “heads we win, tails you lose” financial model?

John Birkett,

12 Horseleys Park,

St. Andrews.

RBS chief executice Stephen Hester states: “I believe the creating of ring-fences increases some of the systemic risk and decreases the ability of banks to withstand the risk,” (The Herald, July 13).

What he is actually saying is that he accepts the performance of the “casino banking” element of RBS is unpredictable and wants the rest of the business to buffer potential losses within this part of the organisation.

This may be an advantage to RBS and its shareholders but is of no benefit to those customers who use the High Street functions of the bank. It also demonstrates where his loyalties lie, in as much as somebody who was parachuted into the position to solve the problems created by the policies of the previous executive is, at heart, intent on essentially continuing the same business structure he inherited.

This is understandable as he is a well-paid banker and it is better for RBS as a business to continue the current model, but not necessarily in the best interests of UK plc.

The UK taxpayer gains no benefit from the casino banking element of RBS and the core customers gain nothing. The only beneficiaries are the shareholders.

We may be the majority shareholder at present, but in effect we have just given RBS a huge loan to allow it to stay afloat and become solvent. At the appropriate time we will perhaps get our money back. I doubt that we will get the true value back. The company will then rumble on making money for the same people it always has.

The Government, which dodged the issue by creating the quango UK Financial Investments to look after our banking shares and dictate policy, has to be more proactive and stop the tail wagging the dog.

You may need specific banking experience to work out fine detail but you don’t need to be a banker to see that the investment banking element should be separated from the High Street functions.

However, as has been demonstrated by the Murdoch affair, our politicians seem to have to be placed in a position where their own self interests are at risk before they discover the need to scuttle to the moral high ground.

Why do they sit docile as sheep while these people, who would be bankrupt without the taxpayers’ bail-out, make fundamental decisions that impact on all of us?

David J Crawford,

131 Shuna Street,

Glasgow.