But he also warned that the new set-up could be undermined unless regulators are protected from bank lobbying.
The Government plans to force banks to ring-fence their retail banking businesses from higher-risk investment banking arms.
BANK of England Governor Sir Mervyn King has predicted that bank bosses could eventually decide to split up their institutions, even though planned reforms stop short of this.
But he also warned that the new set-up could be undermined unless regulators are protected from bank lobbying.
The Government plans to force banks to ring-fence their retail banking businesses from higher-risk investment banking arms.
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