CHANCELLOR of the Exchequer Alistair Darling promised tighter regulation of the financial system as he warned that bankers who return to excessive risk-taking will be "brought back to Earth".

Mr Darling indicated that next week's banking reform White Paper will include new powers for the Bank of England and Financial Services Authority to prevent a repeat of last autumn's meltdown.

Amid signs of the return of the bonus culture in the City of London, he warned that it would be "disastrous" if bankers got the idea that the crisis was now over and they could go back to their old ways.

"There are people who are too complacent in my view," he said. "They need to be brought back to Earth."

Some banks are still operating only because they have been rescued by taxpayers, Mr Darling said.