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Britain’s biggest high-street banks will be spared a drastic shake-up as Sir John Vickers is expected to focus his efforts to reform the industry on far-reaching structural measures.

While the chairman of the Independent Commission on Banking will on Monday set out radical plans to force UK banks to ringfence retail banking and some commercial businesses, his proposals to increase competition will be more “evolutionary”, according to people familiar with his thinking.

George Osborne was spending the weekend reading the report at the G7 summit in Marseilles. “He thinks it’s a very good report and regards it as an important step in reforming our banks so that we don’t repeat the terrible mistakes of the last few years,” a treasury source said. “And he thinks John Vickers and the rest of the commission have done a good job.”

Sir John is expected to step back from an earlier proposal to force Lloyds Banking Group, the UK’s biggest high-street lender, to sell more than the 632 branches it is obliged to divest under the European state aid rules agreed following its acquisition of HBOS.

However, he will take measures to ensure that Lloyds sells a large enough portion of its business to create a strong new challenger in the market. He is expected to recommend that the Lloyds branches are sold to an existing player so the combined group has a sufficiently large market share to rival the big banks.

This would appear to propel the Co-operative Group into pole position to buy the business. The other two bidders – Sun Capital Partners, Hugh Osmond’s investment vehicle, and NBNK, a group set up by Lord Levene – do not have existing operations, although NBNK is in talks to buy the UK business of National Australia Bank.

The ICB is also understood to want the new consumer regulator, the Financial Conduct Authority, to be handed a specific and overriding duty to promote competition in the market.

Its task of promoting competition, however, has largely been overshadowed by its efforts to make banks safer – and by a fierce debate over how that can be achieved without undermining economic recovery.

Attention has focused largely on the ICB’s central proposal to force banks to ringfence core businesses including customer deposits, mortgages and some business loans, protecting them from riskier investment banking.

Sir John will define exactly how the ringfence should be structured, leaving banks little room for interpretation. He will stipulate where the line should be drawn.

Some banks had hoped for a more flexible approach that would allow them to adapt the model to their own business structures.

The ringfence model is now widely supported by the government, which intends to push through the new legislation within this parliament but give banks a number of years to bring in the changes.

Copyright The Financial Times Limited 2017. All rights reserved.

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