According to the authorities, separating the retail and investment divisions of larger institutions would help reduce the amount of risk in the banking system.
The two parties explained that reform is essential if any future financial crises are to be avoided.
A banking levy is expected to be introduced by the new government as part of its implementation of reforms.
In a statement, the new government said: âThe parties wish to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way.â
âWhile recognising that this would take time to get right, the commission will be given an initial time frame of one year to report.â
George Osborne is to lead the Treasury as the new chancellor of the exchequer while Liberal Democrat Vince Cable is to take control of the Department of Business.
The former is thought to support the introduction of a new banking levy at international level while the latter would like a unilateral break-up of the banks.
By Jim Ottewill