The banking industry needs deeper reforms than the ones already laid out by the government-appointed Independent Commission on Banking (ICB), the National Institute of Economic & Social Research (NIESR) think-tank said on Thursday.

The NIESR added there was a strong case for a full separation of companies' retail and wholesale banking activities - an option which Britain has decided against.

Deeper and more fundamental reforms of the governance of banking and funding markets are required, NIESR director Dr Angus Armstrong said in a research paper.

There is a strong case for full separation between retail and wholesale banking. Full separation, rather than just ring-fencing as proposed by the ICB, would have a better chance of addressing the severe corporate governance issues in banks, he added.

In September, the ICB published its final report on reforms for Britain's banking industry, which is dominated by the Big Four of Barclays , HSBC and part-nationalised lenders Lloyds and Royal Bank of Scotland .

The ICB said banks should form separate subsidiaries for their retail and investment activities under the same parent holding company, and establish a ring-fence to limit the extent to which a bank can use money in its retail arm to prop up its investment bank.

The ICB also called on UK banks to store up billions of pounds in extra capital, but gave them until 2019 to implement the new regime.

(Reporting by Sudip Kar-Gupta; Editing by Elaine Hardcastle)