London close: Banks tumble as Osborne speaks

The Footsie tanked in late afternoon trade with the government's response to Sir John Vickers banking report weighing heavily on the banking sector.In a debate in the House of Commons, Chancellor of the Exchequer George Osborne said that lenders should be forced to ring-fence their high street lending operations from the investment banking activities, endorsing proposals made by the Independent Commission on Banking (ICB). The two new banking segments are expected to governed by two separate boards. Secondly, banks will require bigger cushions to absorb losses "without recourse to the taxpayer," the statement said. Thirdly, more banks should be put on the high street to increase competition in the banking sector.The total cost of the shake-up to UK banks would be between £3.5bn and £8bn, the Telegraph writes."Our objective is to make sure what happened in Britain never happens again. That taxpayers are protected and customers get a better service," the statement said.BANKS TUMBLE LATE ONBanks led the declines on Monday, with Lloyds, Barclays and Royal Bank of Scotland (RBS) falling heavily. Osborne also announced that further significant reductions will be made to RBS's investment bank, "scaling back riskier activities that are heavy users of capital or funding."Aggreko was among the (few) risers on the FTSE 100 after its trading statement today. After raising its profits forecasts twice already this year, the temporary power and temperature control provider informed that full-year profits are expected to slightly ahead of the previous guidance given in October. On the FTSE 250, online grocer Ocado sank after revealing that it had to operate "under capacity constraints" at its Hatfield distribution centre in the fourth quarter. Profit margins had been hit by production issues as well as the cost of employing extra staff as it installed further capacity, the company said.JD Sports Fashion was the high riser following a tough month for the high streets sports retailer. JD said in its last trading update that while the full-year performance is "substantially" dependant on the key Christmas period, full-year earnings should be in line with expectations.Henderson Group, the investment management company, sold its share of the Hermes private equity fund, but shares fell despite the firm assuring that "There is no gain or loss for the group on disposal of its interest for cash." KIM JONG-IL, MOODY'SIn other news, the death of Kim Jong-Il has shaken nerves, with many wondering what the country's political landscape would not look like now in the absence of the long-running leader. The nation's nuclear programme has been pushed into focus once again, with the military being placed on special alert following the news.Ratings agency Moody's downgraded Belgium's rating by two notches from Aa1 to Aa3 with a negative outlook. On Friday, Fitch had put the country's rating - along with Spain's, Slovenia's, Italy's, Ireland's and Cyprus's - on watch for downgrade.FTSE 100 - RisersShire Plc (SHP) 2,150.00p +1.90%Aggreko (AGK) 1,848.00p +1.71%InterContinental Hotels Group (IHG) 1,082.00p +1.41%Unilever (ULVR) 2,096.00p +1.40%Imperial Tobacco Group (IMT) 2,355.00p +1.29%AstraZeneca (AZN) 2,949.00p +1.24%Associated British Foods (ABF) 1,100.00p +1.20%SABMiller (SAB) 2,176.00p +1.19%Burberry Group (BRBY) 1,151.00p +1.14%Reckitt Benckiser Group (RB.) 3,184.00p +1.08%FTSE 100 - FallersLloyds Banking Group (LLOY) 23.46p -4.22%Vedanta Resources (VED) 1,046.00p -3.59%Barclays (BARC) 165.95p -3.21%Royal Bank of Scotland Group (RBS) 19.40p -3.00%Man Group (EMG) 123.80p -2.98%Kazakhmys (KAZ) 851.00p -2.63%Fresnillo (FRES) 1,514.00p -2.51%Essar Energy (ESSR) 180.50p -2.38%Tullow Oil (TLW) 1,299.00p -2.26%Eurasian Natural Resources Corp. (ENRC) 608.00p -2.25%FTSE 250 - RisersJD Sports Fashion (JD.) 646.00p +8.03%Afren (AFR) 83.95p +7.22%Domino Printing Sciences (DNO) 510.00p +5.88%Daejan Holdings (DJAN) 2,728.00p +4.20%Booker Group (BOK) 72.05p +3.82%Stobart Group Ltd. (STOB) 119.60p +3.64%Travis Perkins (TPK) 774.00p +2.52%Provident Financial (PFG) 937.50p +2.18%Kier Group (KIE) 1,329.00p +2.07%Ladbrokes (LAD) 123.10p +1.99%FTSE 250 - FallersOcado Group (OCDO) 59.20p -16.85%Allied Gold Mining (ALD) 137.00p -7.06%Salamander Energy (SMDR) 191.30p -5.95%Aquarius Platinum Ltd. (AQP) 150.70p -5.81%Jupiter Fund Management (JUP) 212.70p -5.26%Phoenix Group Holdings (DI) (PHNX) 500.00p -4.40%Kenmare Resources (KMR) 40.23p -4.21%Barratt Developments (BDEV) 89.00p -3.89%SDL (SDL) 620.00p -3.88%Kesa Electricals (KESA) 60.20p -3.76%