Britain’s 'too-big-to-fail' banking groups could be forced to hoard billions of pounds of extra capital as an insurance against future financial crises, after Alistair Darling decided against splitting them up.

The chancellor is expected to announce next month that banks such as HSBC, Royal Bank of Scotland, Lloyds Banking Group and Barclays could be forced to hold more capital than the sector average.

The move would be an acknowledgement that some banks are too big to fail and that higher capital ratios are the penalty they pay for their implicit reliance on the taxpayer to bail them out if they run into trouble.

Financial Times