UK bank 'ringfencing' still necessary, says architect of plan

LONDON, June 30 (Reuters) - The case for making British banks protect domestic retail customers from riskier parts of their operations is as strong now as it was in 2011, the architect of the proposals told a House of Lords committee on Tuesday.

The Bank of England has told banks they must set up a boundary around their branch operations to protect taxpayers from any repetition of the multi billion-pound bailouts required during the financial crisis of 2007 to 2009.

John Vickers, who headed the Independent Commission on Banking (ICB) which recommended the new "ringfencing" rules in 2011, said the rules were still necessary despite some bankers saying other regulatory reforms had made them redundant.

"In my view the case for those measures every bit as strong as when we made our report four years ago, arguably stronger still," Vickers told the House of Lords Economic Affairs Committee.

The ICB was tasked with making proposals to reform the industry after Britain bailed out Royal Bank of Scotland (LSE: RBS.L - news) and Lloyds Banking Group at a combined cost of 66 billion pounds during the crisis.

Former Barclays Chairman David Walker has said new capital and liquidity requirements introduced since the ICB's report and new European rules on the recovery and resolution of failing banks had made ringfencing redundant. (Reporting by Matt Scuffham, editing by Sinead Cruise)