A ban on risky trading activities by large British banks could be needed to stop them taking advantage of UK government support, MPs said today.

The City watchdog pledged today to shake up its supervision of the UK’s largest banks after admitting a series of blunders in its handling of the Northern Rock crisis.

UK chancellor Alistair Darling said that he was considering guaranteeing people’s savings held in a bank or building society up to £100,000 (€143,404) in the wake of the Northern Rock crisis.

British Chancellor Alistair Darling today pledged the UK government would “do everything we can” to return financial markets to normal in the wake of the Northern Rock crisis.