Giving evidence to a parliamentary inquiry, Sir John, who headed last year's Independent Commission on Banking, said he supported calls for legislation that would give the Government reserve powers to break up banks if they try to find ways to circumvent the ring-fence.
But he said he saw no need for a full break-up, saying it would be expensive and might not produce any positive benefits.
"I believe ring-fencing will work without reserve power but there is an even higher likelihood of it working with the reserve power," Sir John told the Parliamentary Commission on Banking Standards.
A ring-fence will be particularly tricky for banks, such as 82% state-owned RBS, which have substantial investment banking activities as well as conventional corporate and retail banking businesses.
Some banks are worried the ring-fence could make it difficult to offer services, such as hedging of exchange rate risks, to mainstream clients.
The parliamentary commission has already indicated it is in favour of "electrification" of the ring-fence. But former Barclays chief executive Martin Taylor told the commission last month that banks could leave Britain if they were asked to implement full separation.
Sir John reiterated his view that the merger of Lloyds TSB and Edinburgh-based Halifax Bank of Scotland was a mistake.
"It was very regrettable both for competition reasons and financial stability reasons the Lloyds transaction was waved through the way it was in the autumn of 2009," he said. But he said that there had already been substantial integration of the two businesses by the time the ICB came to consider it.
"We looked hard at whether there was a way we could reverse Lloyds-HBOS," he said.
He told the inquiry the ICB had opted not to advocate full separation of banks' risky and mainstream activities as it was unable to see a way this could be done without full government ownership of a bank. He added: "If the Government owned the entirety of a bank it would have been open to restructuring options that are much more difficult in the private sector.
"This is a complicated, costly, difficult business."
Sir John also said he was concerned the Government had watered down his recommendations and should impose stricter rules on banks' funding requirements. He said Britain was "a quarter or a third along" its path to reforming the industry.