MEXICO CITY (Reuters) – Britain would seriously consider splitting banks’ retail and investment banking arms if recommended by an independent inquiry, Deputy Prime Minister Nick Clegg said on Tuesday.

The Independent Commission on Banking (ICB), set up in the wake of the financial crisis to consider a radical shake-up of the sector, is due to publish an interim report on April 11.

In an interview with Reuters, Clegg said splitting bank operations was an option the government was prepared to weigh.

“If their recommendation unambiguously proves that further regulatory action is required, possibly hiving off high-risk banking activities from low-risk banking activities, of course we’re duty-bound to look at that very closely indeed,” he said during a visit to Mexico City.

Sir John Vickers, who heads up the ICB, said in January the probe was unlikely to include a formal break-up of the top lenders but one option was to capitalise them on a standalone basis.

A Reuters poll last week found analysts and fund managers thought a recommendation to ring-fence retail and trading divisions was more likely than full break-ups.

Britain’s banking industry is dominated by the “Big Four” of Lloyds (LLOY.L: Quote, Profile, Research) , Royal Bank of Scotland (RBS.L: Quote, Profile, Research), Barclays (BARC.L: Quote, Profile, Research) and HSBC (HSBA.L: Quote, Profile, Research), who have all resisted calls to restructure their businesses.

MEXICO CITY (Reuters) – Though it exports more than Brazil and India and enjoys the kind of population growth Russia can only dream about, Mexico has long been in the shadow of its more dynamic emerging market cousins.

Today Mexico has a growing body of supporters who believe it is closing the gap on the so-called BRIC nations as a driver of global growth, powered by rising competitiveness and the willingness to capitalize on untapped financial resources.

Grouped under the “BRIC” moniker coined by Goldman Sachs’ Jim O’Neill in 2001, Brazil, Russia, India and China have leapt up the chart of the world’s biggest economies, and recent forecasts suggest Mexico may soon advance at a similar pace.

Goldman estimates that by 2020, BRIC nations will account for nearly half of global growth, picking up the slack from ageing and debt-laden developed economies, notably in Europe.

Mexico, which President Felipe Calderon this week described as a “predominantly middle class society”, should provide the biggest boost to growth from the chasing pack, the bank said.

Despite Calderon’s ongoing conflict with drug cartels that has cost 36,000 lives in the past four years, investors have kept faith in Mexico, piling money into its stock exchange, which hit an all-time high in January.

“The Mexican president doesn’t understand why it’s not called ‘BRICM’,” said Johannes Hauser, managing director of the German-Mexican chamber of commerce (CAMEXA).

MEXICO CITY (Reuters) – Though it exports more than Brazil and India and enjoys the kind of population growth Russia can only dream about, Mexico has long been in the shadow of its more dynamic emerging market cousins.

Today Mexico has a growing body of supporters who believe it is closing the gap on the so-called BRIC nations as a driver of global growth, powered by rising competitiveness and the willingness to capitalize on untapped financial resources.

Grouped under the “BRIC” moniker coined by Goldman Sachs’ Jim O’Neill in 2001, Brazil, Russia, India and China have leapt up the chart of the world’s biggest economies, and recent forecasts suggest Mexico may soon advance at a similar pace.

Goldman estimates that by 2020, BRIC nations will account for nearly half of global growth, picking up the slack from aging and debt-laden developed economies, notably in Europe.

Mexico, which President Felipe Calderon this week described as a “predominantly middle class society”, should provide the biggest boost to growth from the chasing pack, the bank said.

Despite Calderon’s ongoing conflict with drug cartels that has cost 36,000 lives in the past four years, investors have kept faith in Mexico, piling money into its stock exchange, which hit an all-time high in January.

“The Mexican president doesn’t understand why it’s not called ‘BRICM’,” said Johannes Hauser, managing director of the German-Mexican chamber of commerce (CAMEXA).

MEXICO CITY (Reuters) – Security fears at U.S. companies in Mexico have increased over the past year, fueled by growing concern about the threat from drug cartels, a poll by the American Chamber of Commerce of Mexico showed.

Some 67 percent of respondents in the study published on Tuesday said the security situation in Mexico had worsened in 2010, a rise of nine percentage points from the previous year.

Only 8.0 percent of those polled by the Chamber, which accounts for the bulk of foreign direct investment into Mexico, took the view that conditions had improved.

Foremost among the causes were threats to workers and increasing extortion by criminal gangs, who have been at war with the state since President Felipe Calderon launched a crackdown on the cartels after taking office in late 2006.

“These problems have affected operations, causing various companies to restrict movement of staff into and within Mexico,” the report by the chamber said.

Over the past four years, more than 36,000 people have been killed in violence related to the drug war, although reports of workers being actively targeted by the gangs are rare.

Earlier this month, however, officials told Reuters two employees of Mexico’s state oil monopoly Pemex were killed by suspected drug gang hitmen.

MEXICO CITY/WASHINGTON (Reuters) – Mexican President Felipe Calderon will press President Barack Obama to crack down on U.S. drug consumption and illegal arms sales when they meet on Thursday to smooth over troubles in their drugs war alliance.

Calderon last week accused the United States of damaging efforts to beat back drug cartels, just days after one of the worst attacks on U.S. officials in Mexico left one Immigration and Customs Enforcement (ICE) agent dead and another wounded.

Instead of seeking to reassure Washington, Calderon uncharacteristically blasted the U.S. ambassador to Mexico as “ignorant”, and lashed out at ICE, the CIA, and the Drug Enforcement Administration for their role in the drugs war.

“The reality is that they don’t coordinate with each other, they’re rivals,” he told a Mexican newspaper.

The spat has raised the temperature for Calderon’s first visit to Washington since May, although the two leaders will again commit to battling the gangs thwarting trade, investment and tourism, especially in increasingly lawless border areas.

The Obama administration has shown a fair amount of attention to Mexico and acknowledges its share of responsibility for the border chaos. But Calderon’s visit comes at an inauspicious time for a White House wrapped up in the sweeping political changes across the Middle East.

Calderon said Washington must do more to curb U.S. demand for drugs and stop illegal weapons sales to Mexico. A senior U.S. government official said efforts had already been ramped up to stop weapons smuggling and cut demand for illegal drugs.

MEXICO CITY (Reuters) – The Mexican army said on Wednesday it had arrested a suspect in the roadside killing of a U.S. Immigration and Customs Enforcement agent in Mexico last week that sparked outrage in the United States.

A second ICE agent was wounded in the shooting on a major highway near the central city of San Luis Potosi, north of the capital, in one of the worst attacks on U.S. agents in Mexico in more than a decade and a sign of Mexico’s worsening drug war.

It was not immediately clear how big a role the suspect may have had in the shooting and the army said it would provide further details on the arrest later on Wednesday.

“U.S. authorities are awaiting access to him,” a U.S. official said, declining to say when that would occur.

The two unarmed agents were shot by suspected drug gang members after their armored SUV was overtaken and forced off the road by two vehicles. Agent Jaime Zapata later died of his injuries and was mourned by more than a thousand people at his funeral in south Texas on Tuesday.

State Department spokesman Charles Luoma-Overstreet praised Mexico for the suspect’s arrest, underscoring Washington’s strong public support for President Felipe Calderon’s crack down on drug cartels despite a growing death toll of more than 34,000 since December 2006.

“We look forward to a judicial process that ensures justice is served,” he said. “Effective cooperation serves the interests of both countries,” he added.

BERLIN (Reuters) – Take a declining population, stir in fears of economic collapse, add a bestselling book on the perils of Muslim immigration and you have the ideal mix for a political scrap about the integration of minorities in Germany.

Chancellor Angela Merkel’s ruling coalition this year faces seven state elections, one of which for the first time pits established parties against a group founded by Germans of Turkish origin whose stated mission is to improve integration.

Though polls give the Bremen Integration Party (BIP) little hope of entering parliament when the northern city state holds a vote in May, the BIP’s emergence has crystallized an awkward dilemma of growing importance for German policymakers:

Do lawmakers need to increase pressure on immigrants to adapt to German ways, or does the country need to make itself more attractive to outsiders to keep the labor market afloat?

A row over Muslims stirred up last year by ex-central banker Thilo Sarrazin means politicians can no longer duck the issue, said Gerd Langguth, a political scientist at Bonn University.

“Integration will be a hidden agenda in the elections,” he said. “I don’t think politicians will go on the offensive because it’s too dangerous due to Germany’s past. But the Sarrazin debate is forcing parties to address the issue.”

Sarrazin topped bestseller lists last year with “Deutschland schafft sich ab” (Germany does away with itself), a book that argued German culture was at risk from Muslims, who he said had been a drain on state coffers since arriving after the war.

BERLIN (Reuters) – German resistance to bankrolling European bailouts is likely to stiffen this year as Chancellor Angela Merkel’s embattled conservatives face 25 million voters in state elections with an untested crop of politicians.

An unprecedented number of senior lawmakers have quit Merkel’s Christian Democrats CDU.L in recent months and the fate of the party is now tied to its leader as never before. Merkel will be anxious to downplay fears that German taxpayers could face additional burdens in Europe’s sovereign debt crisis.

“She’ll be on the defensive on Europe with the electorate,” said Hans Vorlaender, a political scientist at the University of Dresden. “There’s going to be a lot of doublespeak.”

“The business of government will get harder for Merkel because she can’t spread the burden the way she could before. Now all the elections are going to be pinned on her.”

Next month’s poll in Hamburg will be the first of seven state elections in 2011 and the first since Germany backed a 750-billion-euro (647 million pounds) euro zone bailout fund that lawmakers had fought to avoid and have repeatedly said should not be expanded.

Damaged by in-fighting, the loss of control of the upper house of parliament and a slide in popularity, the government has already hinted that weaker euro zone nations should take more responsibility for battling the crisis.

CHANGE OF GUARD

BERLIN (Reuters) – German resistance to bankrolling European bailouts is likely to stiffen this year as Chancellor Angela Merkel’s embattled conservatives face 25 million voters in state elections with an untested crop of politicians.

An unprecedented number of senior lawmakers have quit Merkel’s Christian Democrats (CDU) in recent months and the fate of the party is now tied to its leader as never before. Merkel will be anxious to downplay fears that German taxpayers could face additional burdens in Europe’s sovereign debt crisis.

“She’ll be on the defensive on Europe with the electorate,” said Hans Vorlaender, a political scientist at the University of Dresden. “There’s going to be a lot of doublespeak.”

“The business of government will get harder for Merkel because she can’t spread the burden the way she could before. Now all the elections are going to be pinned on her.”

Next month’s poll in Hamburg will be the first of seven state elections in 2011 and the first since Germany backed a 750-billion-euro euro zone bailout fund that lawmakers had fought to avoid and have repeatedly said should not be expanded.

Damaged by in-fighting, the loss of control of the upper house of parliament and a slide in popularity, the government has already hinted that weaker euro zone nations should take more responsibility for battling the crisis.

CHANGE OF GUARD

By Dave Graham

BLAINSLIE, Scotland (Reuters Life!) – John Moffat’s sparkling eyes grow dim when he remembers the 2,000 sailors swallowed up by the Atlantic after his torpedo bombers consigned the German battleship Bismarck to its doom nearly 70 years ago.

“That still haunts me. It was a terrible sight. All these heads bobbing up and down in the huge waves, and not a chance in hell of being saved,” Moffat, 91, told Reuters in an interview.

Moffat is one of the last survivors from the biplane bombers that on May 26, 1941, crippled what was then the world’s biggest warship, enabling the British Navy to destroy the Bismarck.

The sinking showed battleships could not match air power and put an end to Hitler’s dreams of challenging British superiority on the Atlantic, forcing Germany to focus on submarine warfare.

Moffat’s tales of his career as a pilot are peppered with laughter and smiles, and the retired Scottish hotelier is still amazed that he survived his date with the Bismarck. Only when recalling the human cost does he become somber and serious.

Two days before Moffat’s raid, the ship shook Britain by destroying the pride of the Royal Navy, HMS Hood, prompting Winston Churchill to issue his order to “sink the Bismarck.”