'Living wills' law for banks for new crisis

Alistair Darling today pledged to force banks to draw up "living wills" so they can be dismantled more easily in the event of another Lehman Brothers-style crisis.

The Chancellor outlined plans for new laws this autumn to shore up the financial system.

The Financial Services Authority already has the power to force banks to introduce living wills, but Darling said: "We are considering whether to make that more explicit. In particular we need a timetable. This is something you can't just allow to drag on."

He said banks must simplify their often complicated corporate structures, particularly given that many have been set up to minimise tax.

"I do worry when an organisation is structured for tax purposes rather than for the efficiency of its business and the strength of its business," Darling told the Financial Times.

City commentators warned such a move would face opposition.

"Legislation of this nature can seriously damage the infrastructure of many banks," said David Buik of BGC Partners."