UK Chancellor Osborne favours Vickers report on banking shake-up

As expected Chancellor George Osborne yesterday accepted most of the recommendations of the Vickers' banking report, including protecting retail banking from riskier investment activities, by ring-fencing their operations.

Reforms to the banking system designed to prevent a repeat of the financial crash will have to be implemented in full by 2019, said Osborne.

He also backed the suggestion of the Vickers panel, formally called the International Commission on Banking, that banks should keep back a bigger cushion of prime assets to cover future bad loans.

The reforms to the banking sector will now ensure that the deposits and overdrafts of ordinary consumers and small businesses will be handled only by ring-fenced parts of banks, who will not be permiited riskier investment activities.

Backing the provision, the chancellor asserted, "We want to separate high street banking from investment banking, to protect the British economy, protect British taxpayers and make sure that nothing is too big too fail.''

"Second, we will make sure the banks have bigger cushions so they are better able to withstand losses."