Chancellor George Osborne will set out plans for structural reform to the banking sector in line with the recommendations of the Independent Commission on Banking in his Mansion House speech next month.

Osborne is set to deliver his speech on June 14. The move is expected to be signalled in tomorrow’s Queens Speech. The Treasury says a white paper will be published next month.

The ICB’s final report, published last September, called for the retail operations of universal banks to be ringfenced from their investment arms, a move commission chairman Sir John Vickers says takes taxpayers “off the hook” if riskier investment arms get into trouble.

The commission also recommended ringfenced retail banks hold 10 per cent core tier one capital, more than the 7 per cent required by the global agreement of Basel III, and that the bank as a whole should have a loss absorbing capacity of between 17 and 20 per cent.

The white paper will say the Government intends to push ahead with the ICB’s recommendation of “depositor preference”. It would mean retail customers get their money back ahead of unsecured creditors and those who lend money to banks in the event of a bank failure.

It will also set out detail on how the ringfence will work as well as proposals for banks to be able to more easily absorb losses. In a bid to boost competition in banking, the white paper is also expected to propose moves to make it easier for customers to switch accounts.

Draft legislation is expected by the autumn with the Government committed to getting all relevant legislation through Parliament by 2015. The reforms are set to be introduced in 2019 alongside new capital requirements for banks set out in Basel III.

A Treasury spokesman says: “We said that we would legislate to fully implement the Independent Commission on Banking to make Britain’s banking system safer by the end of this Parliament, and we are on track to do that.

“We will publish detailed proposals in a white paper next month.  These far-reaching reforms will help solve the British dilemma of how Britain can be home to one of the world’s leading financial centres without exposing British taxpayers to the massive costs of those banks failing.”