Osborne to spell out bank plans
The report outlined a series of recommendations to raise standards in the banking sector following the Libor rate-rigging scandal. Senior bankers should be personally responsible for malpractice, with a new criminal offence of reckless misconduct in the management of a bank that carries a custodial sentence, the commission concluded. It also called for bankers to be licensed and to sign up to a set of banking standards rules.
A Treasury spokesman said the report was a "very impressive piece of work". "There are many recommendations in it which will help the Government's plan to create a stronger and safer banking system," he added.
Meanwhile, the Chancellor is expected to use his annual Mansion House speech to suggest that a sell-off of the taxpayer's 40% stake in Lloyds could start by 2015 amid fresh pressure to split up Royal Bank of Scotland (RBS).
RBS bosses recently insisted it would be fit for a return to the private sector within a year, but there are fears that would mean a big hit for the public purse. Shares are trading at around 320p - still significantly below the 500p break-even price for the Government on its £45 billion bailout.
The commission said the strategy for returning RBS to the private sector "has been allowed to run for five years", but added: "It is time to look at this afresh."
Tory MP Andrew Tyrie, the commission chairman, urged the Government to put "political considerations" to one side and said it must launch an immediate review of the benefits of splitting RBS. Under such a plan, the bank's bad debts would be hived off to free the ''good'' bank to lend more to businesses and boost the economy. Mr Tyrie said: "The current state of RBS creates problems for banking competition and for the British economy. Further restructuring may well be needed. The Government may need to be bold."
Amid mounting concerns over the level of direct Government intervention in the management of the state-backed banks, the commission concluded that UK Financial Investments (UKFI) was increasingly being used as a "fig leaf" to disguise the level of control and should be wound up.
On Tuesday, Mr Osborne denied forcing Stephen Hester to quit as head of RBS, but the commission said in its report the Government has interfered in the running of the two partly state-owned banks, particularly RBS. "On occasions it has done so directly, on others it appears to have acted indirectly, using UKFI as its proxy," it added.
© 2013 Press Association