Borrowing costs will rise if the Government pushes ahead with plans to give savers more protection against bank failures, the Chancellor has been told.

Bankers have warned George Osborne they will be pressured by bondholders and other corporate borrowers to increase rates to compensate for losing ground in the compensation pecking order. Mr Osborne believes the banking claims are exaggerated. He is expected to release details of the better deal for savers in a long awaited white paper on banking reforms ahead of his Mansion House speech on Thursday. He has accepted the recommendation from the 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 the list alongside bigger creditors and international traders. The Chancellor feels that individual investors need the extra protection because they risk losing their savings in the event of a collapse that was outside their control. The 'depositor preference' proposal made by the commission is aimed at transfering the risk of failure from taxpayers to other creditors in the market....Read more here: Banks warn of costs from saver safeguards - Telegraph