The British government will tomorrow "accept in full" radical plans to shake up the banking industry despite fears the measures will harm the economy, UK Business Secretary Vince Cable said today.

Ratings agency Fitch has downgraded the UK taxpayer-backed Lloyds and Royal Bank of Scotland.

British bank chiefs warned today that plans to ring-fence their higher-risk investment arms would cost the British economy.

THE credit ratings of two top British banks were cut yesterday due to the likelihood of less state support in a future crisis, as Britain sought to reassure investors its banks were well capitalised and able to cope with a European debt crisis.

BRITISH business secretary Vince Cable said UBS’s $2.3 billion (€1.68bn) unauthorised trading loss underlines the case for John Vickers’s plan to force banks to insulate their consumer units from their investment banking operations.

The London market watchdog has launched an investigation into why UBS failed to spot allegedly fraudulent trading which has cost the Swiss banking giant £1.3bn.

The London market was led higher by retailers today after encouraging results from Next and John Lewis provided the sector with some much-needed cheer.

Britain’s biggest banks saw their shares fall today after a Government-appointed commission unveiled a far-reaching reform package set to cost the industry up to £7bn (€8.1bn) a year.

Irresponsible bankers who take unacceptable risks or mis-sell products to customers should be barred from the profession, UK opposition leader Ed Miliband said today.

London’s leading index closed higher for a third day running as investors shrugged off fears of a slowdown in the euro region.

Bank of England policymakers will consider more drastic action to kick-start the UK economy today amid signs the fragile recovery is faltering.

The FTSE 100 Index continued its rebound today as positive jobs and manufacturing data from the US ensured a last minute push into the black.

London’s leading shares index closed nearly 3% higher today after a favourable stockbroker’s note triggered a strong session for Britain’s beleagured banking shares.

Darkening clouds over the UK economy mean the British government would be "barking mad" to press ahead with proposals to reform the banking industry, the director general of the CBI business lobby group said today.

Plans to reform the British banking sector should be put on hold until the UK economy has recovered and taxpayers have been repaid for bailing out the banks, the head of the British Bankers' Association (BBA) has said today.

Insurance tycoon Clive Cowdery has emerged as a surprise bidder for the 632 bank branches being sold by the UK's Lloyds Banking Group, it was reported today.

Taxpayer-backed Lloyds Banking Group is expected to face tough questions at its annual meeting tomorrow over a multi-million-pound pay deal for its new chief executive.

HSBC put its US branch network and credit cards business under review today as part of a multi-billion dollar cost cutting plan by new boss Stuart Gulliver.

LONDON city workers are still earning bumper pay packets as rising regular wages offset falling bonuses, research has found.

The controversial £7.7m (€8.78m) pay package awarded to Royal Bank of Scotland's boss is expected to be given the all-clear by the British government today despite a widespread backlash over the deal.

British banking stocks gained today after a key report shied away from recommending a full-blown split of their retail and investment arms.

Blue-chip UK banks rallied today after the sector escaped a radical overhaul in a key government-commissioned report.

British banks should ringfence their retail businesses from investment banking operations to protect savers’ deposits under proposals outlined by the Independent Commission on Banking (ICB) today.

Proposals for the future of Britain’s banking sector will be sketched out on Monday when the Independent Commission on Banking (ICB) delivers its keenly-awaited interim report.

The FTSE 100 Index pushed closer to a six-week high after retail stocks surged following a better-than-expected update from bellwether Marks & Spencer.

Aggreko led the FTSE 100 Index further above the 6000 level today after it was lifted by a deal to supply power to the firm that ran the crippled Fukushima power plant.

BANKS may save about £10 billion (€11.38bn) in capital and other costs under proposals being considered by the Britain’s Independent Commission on Banking aimed at securing the financia lsystem against the collapse of a single lender, a person with knowledge of the plans said.

Royal Bank of Scotland is expected to remain in the red tomorrow when the part-nationalised player reveals full-year figures.

Breaking up Britain’s biggest banks would be a mistake and could hold the sector back from supporting economic growth, the CBI business group said today.

BUSINESS Secretary Vince Cable has pledged to take “robust action” on the “scandalous” and “completely unjustified” payouts by banks in Britain.

High street banks are on the cusp of a second credit crunch that threatens to spark another wave of taxpayer bail outs, a think-tank claimed today.

The issue of whether to break up Britain’s banks will be top of the agenda tomorrow when more details emerge of a Government-led inquiry.