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| Version 2 | Version 3 |
|---|---|
| Chancellor George Osborne backs bank break-up powers | Chancellor George Osborne backs bank break-up powers |
| (about 2 hours later) | |
| The UK's biggest banks will be separated if they fail to follow new rules to ring-fence risky investment operations from High Street operations, the chancellor is set to announce. | The UK's biggest banks will be separated if they fail to follow new rules to ring-fence risky investment operations from High Street operations, the chancellor is set to announce. |
| George Osborne will tell City traders that taxpayers will never be expected to bail out failing banks again. | George Osborne will tell City traders that taxpayers will never be expected to bail out failing banks again. |
| His speech comes on the same day the government introduces its Banking Reform Bill in Parliament. | His speech comes on the same day the government introduces its Banking Reform Bill in Parliament. |
| Legislation will give the government and a banking watchdog new powers. | Legislation will give the government and a banking watchdog new powers. |
| Mr Osborne had previously warned against "unpicking the consensus" over structural reform of the sector. | Mr Osborne had previously warned against "unpicking the consensus" over structural reform of the sector. |
| But the chancellor appears now to have accepted a major recommendation of last year's Parliamentary Commission on Banking Standards which called for a reserve power to "electrify the ring-fence" if banks did not implement reforms. | But the chancellor appears now to have accepted a major recommendation of last year's Parliamentary Commission on Banking Standards which called for a reserve power to "electrify the ring-fence" if banks did not implement reforms. |
| The Independent Commission on Banking, led by Sir John Vickers in 2011, had concluded that ring-fencing was the best way to protect "core" retail banking activities from any future investment banking losses. | The Independent Commission on Banking, led by Sir John Vickers in 2011, had concluded that ring-fencing was the best way to protect "core" retail banking activities from any future investment banking losses. |
| Under the reforms, investment and High Street banks will also have different chief executives. | Under the reforms, investment and High Street banks will also have different chief executives. |
| Less money | Less money |
| In his speech, Mr Osborne is expected to say: "When the crisis hit, the fire was then so great that the whole economy was sacrificed to put it out. | In his speech, Mr Osborne is expected to say: "When the crisis hit, the fire was then so great that the whole economy was sacrificed to put it out. |
| "The British people need to know that lessons have been learnt. And they have." | "The British people need to know that lessons have been learnt. And they have." |
| He will say his predecessor Alastair Darling felt he had no option but to bail Royal Bank of Scotland out. | He will say his predecessor Alastair Darling felt he had no option but to bail Royal Bank of Scotland out. |
| "Not just RBS on the High Street, but the trading positions in Asia, the mortgage books in sub-prime America, the property punts in Dubai. | "Not just RBS on the High Street, but the trading positions in Asia, the mortgage books in sub-prime America, the property punts in Dubai. |
| "I want to make sure that the next time a chancellor faces that decision they have a choice. To keep the bank branches going, the cash machines operating, while letting the investment arm fail." | "I want to make sure that the next time a chancellor faces that decision they have a choice. To keep the bank branches going, the cash machines operating, while letting the investment arm fail." |
| Shadow Treasury minister Chris Leslie said: "If the chancellor is now being dragged towards a partial climb down, this is a step in the right direction. | Shadow Treasury minister Chris Leslie said: "If the chancellor is now being dragged towards a partial climb down, this is a step in the right direction. |
| "We must see fundamental cultural change in our banks. If this does not happen then banks will need to be split up completely, as we made clear in the autumn." | "We must see fundamental cultural change in our banks. If this does not happen then banks will need to be split up completely, as we made clear in the autumn." |
| But Anthony Browne, chief executive of the British Bankers' Association, said the legislation will create "uncertainty for investors, making it more difficult for banks to raise capital, which will ultimately mean that banks will have less money to lend to businesses". | But Anthony Browne, chief executive of the British Bankers' Association, said the legislation will create "uncertainty for investors, making it more difficult for banks to raise capital, which will ultimately mean that banks will have less money to lend to businesses". |