Banks warn of borrowing cost hike as Osborne moves to protect savers

Bankers have told Chancellor George Osborne any move by the government to protect savers in the event of a bank collapse would force them to increase borrowing costs.

The banks said they would face pressure from bondholders and corporate borrowers to hike rates if they lost ground in the compensation pecking order, the Telegraph reports. The warning comes as Osborne (pictured) prepares to give his Mansion House speech to the City on Thursday, in which he will present details of a white paper on bank reforms. Osborne has accepted the recommendations from Sir John Vickers’ Independent Commission on Banking that individual savers should be placed ahead of bondholders and corporate creditors in the event of failure. At present they are lower down th...