The new head of the Confederation of British Industry has spoken out against proposals to break up the country's largest banks.

In a submission to the Independent Commission on Banking the CBI said that banks must be able to finance a private sector recovery and support future growth.

The CBI also said that banks need to hold adequate capital and liquidity against individual risks and activities. So-called "living wills" will also protect core banking services from risks from investment banking, the CBI said.

John Cridland, CBI Director-General, said, "A healthy economy needs a healthy banking system, and the top priority must be financial stability for all. We must strengthen our banks for the future, without relying on the taxpayer. Improving credit flows and providing relevant financial products to businesses will be critical to drive growth and recovery.

"Financial services in the UK is a world class sector, accounting for around 10% of total economic output, so we must not jeopardise this position by acting in isolation on reforms."

Mr Cridland added, "Businesses value integrated services provided by large universal banks, so breaking up existing banks is not the way forward. Instead, structural reform should focus on establishing the necessary capital buffers, having effective recovery and resolution arrangements, and appropriate supervision."