June 24, 2009

The U.K. Treasury is working on plans to push banks to restructure, insulating them from failure of their investment banking divisions, two people with knowledge of the plans said.The Treasury wants to protect banks’ deposit-taking operations after it was forced to rescue Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

Others including HSBC Holdings Plc and Barclays Plc will be asked to ring-fence their investment banking units in order to make it easier to wind them down without triggering systemic panic, the people said.The proposals will be spelled out next week when Chancellor of the Exchequer Alistair Darling proposes rules that would overhaul the way the U.K. polices the financial services industry.