In April this year, an interim Report of the UK's Independent Commission on Banking recommended that large banks should be required to ring fence their retail services - including deposit taking and payment systems - and to support them with additional capital.

Press reports today (June 15, 2011) indicate that the UK Government has accepted this proposal and that Chancellor George Osborne will announce this at his annual Mansion House speech to the City today. Banks would be required to segregate their deposit/payments business into a separate entity and to build a capital buffer equivalent to 10 per cent of risk-weighted assets.

Apart from the greater security extended to consumer and retail business, this proposal would allow for the orderly failure of more hazardous investment banking activities, whilst limiting damage to the wider economy.