The British government will give its full backing to a shake-up of the banking sector proposed by the country's Independent Commission on Banking (ICB), British Business Secretary Vince Cable said on Sunday.

Our own financial services sector needs reform. Our big banks were at the very centre of the financial crisis, what the Europeans call Anglo-Saxon financial capitalism. It needs reform, Liberal Democrat minister Cable told the BBC.

That's why tomorrow the government is going to launch this initiative on the banks accepting in full the Vickers commission. We're going to proceed with the separation of the banks, the casinos and the retail business lending parts of the bank, he added.

In September, the ICB - headed by Oxford University academic Sir John Vickers - said top British banks should ring-fence or protect their retail banking operations from their riskier investment banking arms, in order to protect taxpayers' better in case of future financial crises.

It said banks should hold core capital of 10 percent, it said, plus a further 7 to 10 percent of capital that can be in the form of bail-in bonds - debt that can take a loss or convert into equity to recapitalise a bank if it hits trouble.

There would also be limits to the extent to which a bank could use money its retail arm for its investment banking operations - a move that is set to increase funding costs for UK banks.

(Reporting by Sudip Kar-Gupta; Editing by Michael Holden)