Britain is set to push back the release of details on wide-ranging reforms of its banking sector to June, given the complex issues around the separation of domestic retail banking arms.
The government had planned to release a so-called white paper setting out detail of the changes in the spring, and banks had been told to expect it by early or mid-May.
I would probably say June rather than May, and certainly the first half of May is very optimistic, a Treasury spokesman said on Monday. There is not a set date that has been pinned down yet because, obviously, these are really, really technical issues.
The release had been kicked back to June due to those complexities, a person at one of the big British banks said.
Banks and investors are keen for details to be finalised, as all are going through major changes in their business models as they struggle to improve profitability in the face of more costly regulation.
In December, the government approved proposals to shake up the country's banks, which will force lenders to form barriers between retail operations and riskier investment banking arms to protect ordinary customers better in any future crisis.
But there is uncertainty on a number of key issues, such as how rigid the rules will be on keeping domestic retail operations ring-fenced, including where investment banking services for mid-sized corporates should sit.
There are also uncertainties whether capital and liquidity can move between businesses inside and outside the ring-fence, and how much loss absorbing capital banks must hold.
Many of the proposals emerging from a 15-month independent commission led by Oxford University academic John Vickers have been opposed by banks, as the reforms could cost them up to 8 billion pounds ($13 billion) and add red tape.
Banks had until the end of March to respond to the government's plans.
Vickers said banks should hold core capital of 10 percent, plus a further 7-10 percent in the form of bonds that convert into capital when a bank hits trouble.
The government backed the plan for banks to hold at least 17 percent primary loss-absorbing capital, although it said this would only apply to British operations, and not on all of their overseas assets, which could have hurt HSBC
The government has said legislation for the changes will be in place by 2015 and banks would have until 2019 to implement the proposals - in line with tougher global capital and liquidity rules for the industry.
The purpose of the reforms is to avoid a repeat of the financial crisis, when more than 60 billion pounds of taxpayer cash was needed to bail out two of Britain's biggest lenders - Lloyds
($1 = 0.6213 pound)
(Reporting by Matt Scuffham and Steve Slater)