Barclays chief executive John Varley today warned an influential UK parliamentary committee that so-called 'narrow banking' could lead to a more nationalist and protectionist industry, though he admitted the importance of having a firewall between investment banking and retail deposit-taking businesses.

Varley was the first banker to appear before the Treasury Select Committee to give evidence specifically as part of the parliamentary group's 'Too important to fail' inquiry. The TSC has also taken evidence last month from Mervyn King, Governor of the Bank of England and other senior bank staff, and from witnesses from the academic sector.