15th June 2011
The BBC News website reported that the Chancellor is due to make the announcement in his Mansion House speech on Wednesday evening.
He will say banks must be set up so that their branches and public savings and loans would not be damaged if their investment trading arms ran into trouble.
The BBC also reports that Osborne will announce the privatisation of Northern Rock; the bank was nationalised in February 2008.
By doing so the chancellor is accept the central recommendation of Sir John Vickers' Independent Commission on Banking.
Sir John’s final report is not due until September 12, Mr Osborne will use his Mansion House speech to warn Britain’s bankers to stop wasting time opposing the proposal and to start engaging with the complex detail of how the new system will work in practice.
The Telegraph speculates that public support from Mr Osborne for the proposal will lead to heavy trading in the shares of big diverse banks such as Barclays and Royal Bank of Scotland. These are expected to be hardest hit by the changes.
A Treasury source told the Telegraph: "This is a far-reaching shake-up to make high street banks safer for the taxpayer. The Government set up the banking commission to ask the difficult questions that were not asked before the crisis and this is right at the heart of their answer."
On the comment boards, the plans had plenty of support, although some questioned how the ringfencing would be enacted.
On the BBC angry_of_garston wrote: "Let me get this right. They have to hold 10% so if I deposit £10K they can lend out £100k on the strength of it and charge interest on that imaginary cash whilst paying me a tiny fraction of that interest rate on my savings? Sound like some form of Alchemy."
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