Margareta Pagano: This is the biggest test yet for the coalition

George Osborne's political antennae are working overtime. Via Budapest, where he is attending the Ecofin meeting, the Chancellor has made it clear that he welcomes the Vickers report on British banking even though the rest of the world will not read it until tomorrow morning.

And Osborne, through his spin doctors, has also let it be known that he endorses the controversial idea of ring-fencing the "operationally essential" banking services such as retail – and that he is ready for a backlash from the banks. He also made a point of reminding us that it was he, together with Vince Cable, the Business Secretary, who set up the Vickers commission to investigate ways of making the banking system safer and of protecting depositors and the taxpayer from any future crises.

You can see why. Osborne knows that unless he is seen to be the champion of the small depositor against the big banking beasts he will be toast, not just with the public now but at the next election. It's going to be a delicate path to tread because some banks, such as Barclays and HSBC, are threatening to move overseas if reforms are too penal. City analysts reckon costs could be as high as £5bn, and warn the banks will spread those costs by raising charges to personal and corporate customers – not the intended consequence.

Forget tuition fees or NHS reforms: making the banks safer and taking away the implicit taxpayers' guarantee is by far the biggest test yet for the coalition, especially as Nick Clegg and Cable have argued that only a total split between retail and investment banking will suffice. However, there are signs that the proposals from Vickers to create legally watertight "firewalls" through subsidiarisation may be enough to appease them.

If Osborne, and No 10, want to be seen as the reformers they claim to be, then they must ensure Vickers is given forensic scrutiny when Parliament returns and that, this time, the message is properly communicated. The public's anger over the bankers has not gone away.