King calls for rapid bank reforms

Bank of England Governor Sir Mervyn King has said banking reforms should be passed into law as soon as possible to prevent the plans being watered down.

In a radio interview with the BBC, the central bank boss hinted he would have preferred a complete separation of retail and investment banking rather than the ring-fencing proposed by the Vickers commission.

But he said the plans were "the game in town" and should be enacted by lawmakers quickly to "prevent further lobbying to water down the proposals".

His comments come in response to the Barclays interbank rate-rigging scandal that has rocked the industry. The affair, he said, has highlighted differences in culture between retail and investment banking and confirmed the importance of splitting the two.

"I saw a real attraction in a complete separation (of retail and investment banking)," he said.

Sir Mervyn declined to comment on fresh revelations that he told Barclays chairman Marcus Agius that its chief executive Bob Diamond no longer had the support of his regulators.

Sir Mervyn also offered little cheer on the economy, saying it "doesn't show a great deal of signs of impending recovery".

He warned once more of a "black cloud of uncertainty" hanging over businesses from the eurozone troubles and said more needed to be done to tackle the problems. And he accused European Union leaders of "kicking the can down the road", while the crisis was escalating.

Sir Mervyn, who was interviewed on a regional visit to his home town of Wolverhampton, said the Bank would "very shortly" announce details of its so-called funding for lending programme to encourage banks to lend.

He said efforts by the Bank since the financial crisis began had helped limit the impact on the economy and added he hoped to "inch our way back to a period of more rapid growth" through the current measures being taken.