Banking reforms 'in place by 2019'
Reforms to the banking system designed to prevent a repeat of the financial crash are to be implemented in full by 2019, Chancellor George Osborne has announced.
The reforms will create a "ring-fence" around the high street banks which handle consumer and small business accounts, to insulate them from the risks run by "casino" operations within the same group.
And banks will be required to hold equity capital of 10% - some three percentage points higher than the level proposed in the international Basel III agreement - to act as a "cushion" against potential losses.
Meanwhile, the Chancellor revealed that the largely state-owned RBS bank has been ordered to cut back on its investment activities to concentrate on becoming a "stronger, safer bank, able to maintain lending to businesses and consumers".
And he said that changes to be in place by September 2013 will enable individuals and small businesses to switch banks swiftly and easily, as part of a drive to boost competition in the sector.
In a statement to MPs detailing the Government's response to the Vickers Report, Mr Osborne said that the changes amounted to "the most far-reaching reforms of British banking in our modern history".
He told MPs: "Our objective is to make sure what happened in Britain never happens again, that taxpayers are protected and that customers get a better service.
"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 to fail."
He said the changes will cost the industry £3.5 billion to £8 billion a year and lead to a reduction in GDP of £800 million to £1.8 billion.
But he told MPs the costs would be "far outweighed" by the benefit of avoiding future financial crises, which he said would reach £9.5 billion a year on "modest" assumptions.