Whitehall officials are pushing a three-way deal between the Government, big banks and the Independent Commission on Banking.
According to the FT, the move is aimed at preventing a public confrontation between the banks and the commission, easing tensions between the Conservatives and the Liberal Democrats over banking reform and paving the way for the reprivatisation of Lloyds and Royal Bank of Scotland.
The Independent Commission on Banking, which is chaired by Sir John Vickers, is set to present its interim finding on April 11, with the final report due in September. Bankers have expressed concern at the possible radicalism of the commission.
Officials and bankers say the benefit of a negotiated deal would be to accelerate the timetable for agreed reforms, avoiding the need for time-consuming legislation. It says the move would allow the Government to begin selling its 41 per cent stake in Lloyds and 84 per cent in RBS.
The commission’s April report is expected to be far more conclusive than initially thought, with the April-September period turning into a consultation process. The Treasury has been accused of meddling with the report, however officials have denied this.
Barclays, HSBC and Standard Chartered – the three banks most likely to be affected by the report – have all expressed concerns and have threatened to move abroad if the business costs become too excessive. Barclays is rumoured to be looking at relocating its head quarters to New York.