Archbishop warns Osborne on banks

Justin WelbyThe Archbishop of Canterbury has accused Chancellor George Osborne of lacking the political will to break up the big banks.

The Most Rev Justin Welby warned Mr Osborne he was risking a repeat of the "disasters" of the recent past through his refusal to take more decisive action.

The Chancellor however dismissed his approach as unrealistic, insisting it would mean the end of the City of London as a global financial centre.

The two men clashed when Mr Osborne appeared before the Parliamentary Commission on Banking Standards at Westminster.

The Archbishop - a former oil industry executive who sits on the commission - said the evidence they had received made clear that large, complex banks were not only "too big to fail, they are too big to manage".

Nevertheless the Chancellor, he said, continued to defend a system based on "a small group of absolutely colossal banks" - including the mainly state-owned Royal Bank of Scotland (RBS).

"Is this lack of will to break them up and reduce them to a size that eliminated risk to the economy not simply a recipe for a repetition of the disasters we have seen in the last few years?" he demanded.

Mr Osborne insisted such a drastic solution was not possible in a highly inter-connected global economy.

"I don't think it would be possible to create in Britain a world where we just had a lot of small banks. We live in a highly connected global economy," he said.

"Some of the big players in our country are not British banks. Unless we were to close our doors to all of them and close our financial centre - I don't think that's that realistic."

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