Chairman named for probe into banking industry

Sir John Vickers will produce recommendations on reducing risk, mitigating moral hazard, reducing the likelihood and impact of failure and promoting competition in the sector.

The recommendations, due by September 2011, could force big banks such as Barclays and the Royal Bank of Scotland to split their retail and investment operations.

George Osborne, the Chancellor of the Exchequer, added: "The worst financial crisis in living memory highlighted the significant detrimental impact that failure in the financial sector can have on the real economy and the public finances.

"I am delighted to announce that Sir John Vickers will chair the commission. He has the experience, integrity and independence required to lead this debate."

The British Bankers' Association welcomed the appointment. Angela Knight, chief executive, said: "We are facing unprecedented change and the work of the Independent Banking Commission will play a key role in reshaping the structure of banking regulation in the UK.

"The industry also looks forward to working with Sir John to ensure change is implemented efficiently and effectively and that transition between regulatory authorities does not cause disruption to the financial system."