BRITAIN’S banks will this morning find out what sort of shake-up the industry is facing as John Vickers publishes the Independent Commission on Banking’s (ICB) interim report into competition and stability in the financial sector.

Banks have been given 90 minutes to read and respond to the report before markets open at 8am, with the stock prices of Lloyds and Barclays seen as particularly sensitive to hints of a hard-line attitude from the ICB.

Moves to undo parts of the Lloyds-HBOS merger or prevent cross-selling between investment and retail banks would have a dramatic impact on both banks’ bottom lines.

Legal experts have raised strong concerns about the practical implications of the policies the commission is considering.

The ICB is looking at different forms of ring-fencing to create “firebreaks” between parts of a bank so that a collapse of one business line does not lead to the failure of the whole institution. The idea would be to make each part a separate legal entity or subsidiary.

But lawyers have said the idea is unworkable. Simon Gleeson, a partner at Clifford Chance, says: “A bank is a bunch of systems with a legal structure on top. It isn’t practicable to say that one part or another is a subsidiary. It’s like telling someone to divide their body in half.”

PricewaterhouseCoopers’ Richard Kibble says: “There is no compelling evidence that universal banking contributed to the crisis...It is also unclear what problem would be addressed by ring-fencing particular activities or what the proven benefits are.”

Others have suggested that the ring-fencing proposals will have to be fleshed out in great detail to generate confidence. “It has to be sold in the right way because people are going to be looking at it very carefully,” says FTI Consulting’s Vicky Pryce.

The ICB will now enter a second consultation phase, which Pryce says means “lobbying left, right and centre”, as well as public meetings to gauge reaction to the interim proposals. It will close the consultation in July and write a final report over the summer to hand to chancellor George Osborne in September.

A committee, including both Osborne and business secretary Vince Cable, will implement the proposals.