Clegg calls for less reliance on banking sector

Nick Clegg has called for widespread reform of Britain’s banking sector in the hope that the country becomes less reliant on what he called “overwhelmingly important” companies. 

An interim report on the subject from the Banking Commission is due out next month and Clegg has pre-empted its release with calls for the influence of the banks to be reduced in the interest of the wider economy.

The government spent billions of pounds bailing out Lloyds TSB and the Royal Bank of Scotland during the financial crisis of 2008 and the Liberal Democrat leader is keen to ensure that such a situation cannot arise again.

The banking commission is independent, though it was set up by the Conservative-Liberal Democrat coalition government, and is looking in particular at the merits of splitting banks into separate retail and investment operations.

Clegg said making the banking system safer was vital but would not happen overnight.

“We've got to move away from this situation where they (banks) were so big and overwhelmingly important that we had no choice but to bail them out,” Clegg said on a visit to an industrial site in northern England.

“We allowed them to become too risky.”

The banking commission will deliver initial findings on April 11th, with a final report due by the end of September.

In an interview with Reuters this month, Lib Dem business minister Vince Cable warned the banking industry that heavy lobbying would not affect the government's zeal to reform the sector.