By Matt Falloon
NOTTINGHAM, England, March 24 (Reuters) - Britain must wean itself off of a reliance on banks that are too big to fail, Deputy Prime Minister Nick Clegg said on Thursday, just days away from an interim report on the future of the sector. Britain, which spent billions of pounds bailing out stricken banks including Lloyds TSB and Royal Bank of Scotland during the financial crisis, is keen to reform the industry to protect taxpayers from the costs of any future problems.
An independent banking commission, set up by the Conservative-Liberal Democrat coalition government, is looking in particular at the merits of splitting banks into separate retail and investment operations.
Clegg, the leader of the Liberal Democrats, said making the banking system safer was vital but would not happen overnight.
"We've got to move away from this situation where they (banks) were so big and overwhelmingly important that we had no choice but to bail them out," Clegg said on a visit to an industrial site in northern England.
"We allowed them to become too risky."
The banking commission will deliver initial findings on April 11, with a final report due by the end of September.
In an interview with Reuters this month, Lib Dem business minister Vince Cable warned the banking industry that heavy lobbying would not affect the government's zeal to reform the sector. (Editing by David Holmes)