New bank will be backed by Rothschild

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Britain's largest banks will present their "living wills" to the Financial Services Authority (FSA) next month, ahead of the G20 summit of leading industrialised nations in South Korea.

The resolution plans detail how each bank might be speedily and smoothly wound down in the event of failure. The lack of such plans during the last financial crisis was blamed by many for contributing to the "too big too fail" problem. The "living wills" will form part of talks about reform of the global banking system, to be held at the G20 on 11 and 12 November.

HSBC, Barclays, Royal Bank of Scotland, Standard Chartered, Lloyds Banking Group and Santander will all submit draft proposals next month.

The move comes as another new entrant appears on the British banking scene. Reports at the weekend suggested that Lord Rothschild, Sir Ronald Cohen and the Australian sovereign wealth fund, Future Fund, have committed to invest €450m (£375m) in Haymarket Financial, or HayFin, which will specialise in lending to medium-sized businesses. The commitments take the total invested in HayFin to €1bn.

The bank will not lend to the public but instead concentrate "vanilla lending" to firms with an enterprise value of €100m to €500m. HayFin's main backer is TowerBrook, a private equity firm set up by George Soros's ex-colleague Ramez Sousou.

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