LONDON, Jan 30: British finance minister Alistair Darling on Wednesday outlined proposals for a radical reform of banking regulations to prevent another Northern Rock-style crisis.

Northern Rock was nearly sunk by a severe funding crisis last September when it was forced to request emergency assistance from the Bank of England due to a credit squeeze on world financial markets.

News of the bail-out triggered the first run on a British retail bank in living memory as panic-stricken customers rushed to withdraw their cash.

Chancellor of the Exchequer Darling, launching a consultation document on Wednesday, said that the Bank of England could offer secret financial help to failing banks to prevent another run on a crisis-hit institution.

In the future, the Bank of England could also delay disclosure of any emergency assistance, according to a statement from Darling’s powerful Treasury department.

The plans would be aimed at “reducing the likelihood of banks facing difficulties,” the statement said. They would also seek to reduce “the impact if ... a bank gets into difficulties.”

Darling said on Wednesday that “recent months have seen a period of sustained turbulence and instability in global financial markets, with financial firms across the world affected.“The government is determined that its response is proportionate and appropriate, and will therefore consult actively on these proposals.” As part of a three-month consultation, the Treasury is also seeking guidance on whether it should remove the requirement for a company receiving liquidity assistance to disclose this publicly.

Bank of England governor Mervyn King who was reappointed for another five-year term on Wednesday has repeatedly lamented the fact that the British central bank cannot make covert lending operations to banks in need.

The Treasury has also proposed that the so-called “tripartite” structure of financial regulation -- comprising the Treasury, the Bank of England and the Financial Services Authority watchdog -- should be maintained.—AFP