Bankers warned over risk taking

Chancellor Alistair Darling vowed to tighten regulation of the financial system

Chancellor of the Exchequer Alistair Darling has promised tighter regulation of the financial system as he warned that bankers who return to excessive risk-taking will be "brought back to Earth".

Mr Darling indicated that next week's banking reform White Paper will include new powers for the Bank of England and Financial Services Authority to prevent a repeat of last autumn's meltdown.

Amid signs of the return of the bonus culture in the City of London, he warned that it would be "disastrous" if bankers got the idea that the crisis was now over and they could go back to their old ways.

"There are people who are too complacent in my view", Mr Darling told The Independent.

"They need to be brought back to Earth."

Some banks are still operating only because they have been rescued by taxpayers, said Mr Darling.

"If they go back to the way they were - to business as usual - without asking themselves over and over again what they are doing, that would be disastrous for them and the rest of the world," he said.

"As the economy begins to recover, people must not drop their guard but strengthen their guard to make sure they don't repeat the mistakes of the past.

"Similarly, the regulators must keep a very close eye on what is happening and be vigilant about the risks.

"It is very important people don't get the idea it is all over, that they don't need to bother."