Chancellor's plans likely to be announced in Mansion House speech and white paper on 14 June
Reforming the banking sector is expected to be a key theme of chancellor George Osborne's Mansion House speech next month as the government reaffirms its intention to force banks to erect ring fences around their high street operations.
Osborne is likely to publish the long-awaited white paper on the Independent Commission on Banking's (ICB) proposals on the same day – 14 June – in a battle against time to fulfil his promise to legislate for the proposed overhaul during this parliament.
The white paper, is expected to be signalled in the Queen's speech on Wednesday when she sets out the government's legislative agenda for the current sitting of parliament.
At last year's Lord Mayor's dinner at the Mansion House in the City of London, Osborne had talked about the "British dilemma" – a banking sector that was so large that it could put the economy at risk – and endorsed the proposals by the ICB, chaired by Sir John Vickers, for a ring fence around high street banks.
While the white paper is likely to outline the intricacies of how wide and how high the ring fence around high street operations needs to be, it may also push ahead with a controversial reform known as "depositor preference". Banks have campaigned against this plan which puts savers first if a bank becomes insolvent.
Banks are also expected to be forced to make it easier for customers to shift their accounts in an effort to bolster competition on the high street.
Draft legislation is now likely in the autumn. Osborne has previously said he will get legislation through by the end of this parliament but give banks until 2019 to implement some of the more substantial plans.
A Treasury spokesman said: "We said that we would legislate to fully implement the independent commission on banking to make Britain's banking system safer by the end of this parliament and we are on track to do that.
"We've consulted on the best way to take forward their recommendations. We will publish detailed proposals in a white paper next month. These far-reaching reforms will help solve the dilemma of how Britain can be home to one of the world's leading financial centres without exposing British taxpayers to the massive costs of those banks failing."