By Daniel Hunter
Chancellor George Osborne is set to announce plans that will see the UK's biggest banks separated if they fail to follow new rules to ring-fence risky investment operations from High Street operations.
Osborne will let City traders know that taxpayers will never be expected to bail out failing banks again.
His speech comes on the same day the government introduces its Banking Reform Bill in Parliament. Legislation will give the government and a banking watchdog new powers.
The Independent Commission on Banking, led by Sir John Vickers in 2011, had concluded that ring-fencing was the best way to protect "core" retail banking activities from any future investment banking losses.
Under the reforms, investment and High Street banks will also have different chief executives.
"When the crisis hit, the fire was then so great that the whole economy was sacrificed to put it out," Mr Osborne is expected to say.
"The British people need to know that lessons have been learnt. And they have.
"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."
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