British banks are on notice from Chancellor George Osborne who warns they will be broken up if they fail to protect their day-to-day banking from risky investment activities.
Mr Osborne bowed to political pressure to come down harder on reckless lenders, accepting recommendations from two inquiries in the past two years to ring-fence bank's core retail operations.
European countries are changing their financial systems to prevent a repeat of the 2008 financial crash, trying to strike a balance between popular calls for banks to be reined in and warnings that too tight a leash will choke off recovery.
Mr Osborne says taxpayers are angry at banks' behaviour and will never again be expected to bail them out.
His speech on Monday comes on the same day the government introduces its Banking Reform Bill in Parliament, including allowing customers to switch bank accounts to a rival within a week.
London's reforms go further than France and Germany, which, like the United States, are only demanding that banks separate out their proprietary trading, where they invest the banks' own funds, from the rest of their businesses.
However, the German government is considering a new law that would see executives jailed for up to five years if they are found guilty of reckless behaviour that jeopardises their bank.
But bankers are dismayed by the lack of an international agreement around new banking rules.
Britain's banks have warned it will put them at a disadvantage against their continental rivals.