The Government will order banks not just to have "living wills" so they can be wound down quickly and easily if they go to the wall, but also an "undertaker" to administer them, city minister Paul Myners warned today.

Myners said that the new legislation, which is planned to come into force before the end of the year, would trigger a major restructuring across the sector.

"Some of our banks will have to go through quite significant restructuring over the next few years," Myners said at a conference on regulation in London. "If a business is too complex to produce a living will then it is almost certainly too complex to manage and it represents an unacceptable regulatory risk."

He hit back at his critics who claim that forcing banks to make "living wills" would be both too complex and very expensive. Myners said the Government was not introducing the new rules just for the sake of change.

"The costs of implementing our resolution to change the system will pale in comparison to the costs to the taxpayer in rescuing the banking sector," he added.

Myners also made it clear he blames the banks themselves for their high bonus culture, calling it a "failure of the labour market function".

He said: "Do these bankers and traders - people on bonuses in excess of £10 million a year in some cases - really have unique talent? Or are they reliant on the banks' capital, name and order flow? What do these elite people actually do which others could not do?"

The new legislation will give the Financial Services Authority powers to force banks to draw up living wills to enable a speedy wind-down if the broader financial system is reckoned to be under threat.