15/06/2011 World Business Report

change in the Aude -- aid programme between England and India. We now

have World Business Report. Welcome to World Business Report. The

headlines: A new blueprint for banks, Britain will impose tougher

rules to prevent another financial meltdown. Another day of action -

strikers hope their voices will be heard as the Greek government

debates painful economic cuts. China's president is in Russia

hoping to sign a landmark gas agreement. Both sides are at

loggerheads over prices. It is the biggest shake-up of a Britain's

banks in living memory. The aim to prevent a meltdown in the event of

financial crisis and protect high street savers. George Osborne will

announce tonight plans for firewalls separating the retail and

investment arms at major UK banks. Banks will have decayed higher

amounts of money in their vaults. In his annual speech to the bankers

Institute of London, George Osborne will pledge to ring-fence banks.

This is the central proposal by the independent commission on banking

in its April report. The Chancellor will set in train the privatisation

of Northern Rock, it was nationalised in early 2080, he will

announce that UK banks have to hold more capital for protection against

future losses than the new international minimum. By putting

retail banking into a separate legal subsidiary, ring-fenced

investment banking activities, the giant parts of the banks will be

less exposed in a crisis. The idea is that the retail bits of the

major banks will have more capital to absorb possible losses and in

conditions of extreme danger could be more easily hived off and

rescued. We are joined by a banking analyst to make sense of this

further. It is not a new idea, we hear a lot more tonight when George

Osborne makes his speech. Basically, you have got to get an extra

insurance policy for your kitchen even though you have an insurance

policy for your house. As consumers, it'll mean slightly higher prices

for a retail banking products. It'll be more expensive for the

banks to run retail banking than it is now. In your opinion, is this

the right way to protect the British banking system from another

disaster we have experienced? hate to make this decision. You

lose either way. Leaving them alone means we have to rescue them with

huge amounts of money. The amount that we need to invest to save or

to rescue the banks will now be significantly less. It is a

compromise solution. Most of the banks will complain but then

accepted. We do not know the detail of this yet. When it comes to the

amount that banks have to put aside in case of a financial meltdown, it

will be more than the international standard. Bankers say it is too

much and it reduces our competitiveness. In retail banking

that is not a real issue. Investment banking... Levels for

investment banking will be different than four levels of

retail banking. Is this a brick wall or is this a teabag?

reaction from banks, HSBC is saying we are in favour of this? Lots of

the banks are in agreement for retail banking. They have never

made a lot of money in this sector. They are not that keen on making

changes, no-one is, but they will accept it. Will it cost them a lot

to retracted? Absolutely. It has never been done before. It will

cost money but the banks have plenty of that. Thank you. We will

make sure you are up to date on what George Osborne says later

today. You can find out a lot more online as well. Robert Peston's

blog is right there. You can get his full analysis. That will be

updated later on. China's president is visiting Russia today - energy

is at the top of the agenda. As you said in your headline, a bit of

this agreement going on? Absolutely. Hu Jintao hopes a landmark gas deal

will be signed. The two nations are in a deadlock, struggling to reach

an agreement on prices. If an 11 power deal is signed, this will

pave the way for a 70 billion cubic metres of Russian gas to China over

the next 30 years. Up gas -- Gazprom ape says profits should be

the same as they receive in Europe. China is holding a hard bargain.

There are complications over the routing of two pipelines. Russia

wants to build from Siberia to China. A deal will eventually be

signed however. Thank you. America's credit worthiness is at

risk if the borrowing limit is not raised, that is the assessment of

Ben Bernanke. He wants republican members of Congress to vote in

favour of lifting the current level above its current limits to 14.3

trillion dollars. The US could start defaulting on its obligations

if it is not reached. Flights in Perth are being cancelled because

of a volcano as flat in Chile. -- ash cloud. As you have been hearing,

tens of thousands of angry protesters and a nationwide strike

will form the backdrop as Greece's ruling party debates its austerity

measures today. It is a far cry from the national consensus that

the government wants. If it cannot pass a law it will not get billions

of dollars in aid from the EU and IMF. We are joined by a professor

of finance at London School of Economics. What are they debating

in Parliament today? There are a whole package of measures - one of

them includes a tax rise. It is a programme to take place over the

next four years or so. Public utilities, such as electricity,

water... Will be privatised. These protesters, there are many of them,

what do they want to achieve today? A number of them are employees in

the public sectors which are to be privatised. They will lose their

privileges, high salaries and pensions. People are protesting

because they are upset with the way the politicians have mismanaged the

economy over the past decade. difficulty is, if massive change is

not put in place in Greece is will default on its debt. For these

protesters it is a no-win situation? Absolutely. Some will be

losing by these changes. Some of it is general anger. It is not

rational. The second bail-out is being discussed by EU leaders, they

cannot agree on how to put them into place. Absolutely. How much

should it be borne by the private sector and how much should be borne

by the public sector? It has been quite costly so far. Thank you.

This is a story we will keep you up-to-date on. The euro is under