Osborne vows banking 'reset'

Chancellor George Osborne says 2013 will be the year when the banking system is"reset". He wants new powers to break up the banks if they do not follow rules to ring-fence risky operations.

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Osborne's threat to break up Britain's banks

Launching the Banking Reform Bill today at JP Morgan in Bournemouth today, Chancellor George Osborne will say:

When the RBS failed, my predecessor Alastair Darling felt he had no option but to bail the entire thing 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.

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.

Under the Bill investment and high street banks will also have different bosses and a new watchdog will be set up.

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