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Tories back US bank limit plans Tories back US bank limit plans
(10 minutes later)
Shadow chancellor George Osborne has told the BBC that if the Conservatives win the general election they will copy US plans to limit the size of banks.Shadow chancellor George Osborne has told the BBC that if the Conservatives win the general election they will copy US plans to limit the size of banks.
Under the proposals outlined by President Barack Obama, US retail banks will face curbs on their riskier activities.Under the proposals outlined by President Barack Obama, US retail banks will face curbs on their riskier activities.
This could lead to the largest US banks being broken up.This could lead to the largest US banks being broken up.
The Treasury said it would consider President Obama's comments on bank reform "very carefully".The Treasury said it would consider President Obama's comments on bank reform "very carefully".
'Welcome move'
BBC business editor Robert Peston said Mr Osborne's comments would "generate profound fear in the boardrooms of Barclays and Royal Bank of Scotland".BBC business editor Robert Peston said Mr Osborne's comments would "generate profound fear in the boardrooms of Barclays and Royal Bank of Scotland".
Shares in both banks fell sharply on Tuesday, with Royal Bank of Scotland losing 7% - the biggest decline on the UK's main FTSE 100 share index. Barclays lost 5.9%.Shares in both banks fell sharply on Tuesday, with Royal Bank of Scotland losing 7% - the biggest decline on the UK's main FTSE 100 share index. Barclays lost 5.9%.
Mr Osborne said that President Obama's plans were consistent with those he had expressed in his recent bank reform paper. Under President Obama's proposals, retail banks would be banned from using their own money in risky financial transactions.
The shadow chancellor said his condition for implementing such a radical plan was that it needed international agreement, which is now likely after the US lead. This would prevent them from investing in hedge and private equity funds, or engaging in so-called proprietary trading.
"This is a welcome move by President Obama that accords very much with our thinking," said Mr Osborne.
"I have said consistently that we should look at separating retail banking from activities like large scale propriety trading - and that this was best done internationally."