The former senior international partner and president of Goldman Sachs International has called for banks to scale down, merge or sell off their investment banking businesses in order to avoid becoming obsolete.

Roy Smith, who joined Goldman Sachs in 1966 and ran its European business in the 1980s, argues in this week's Financial News that the impact of the Basel III reforms to bank capital will mean that banks have to be far more radical in reshaping their business models.