Analysts at Bank of America-Merrill Lynch and JP Morgan have cut bank earnings forecasts after last week's rate cuts, The Australian reports. Merrill reduced its banking sector recommendation to Neutral, while JP Morgan's Scott Manning singled out CBA and Westpac as being most affected due to the size of their residential loan book. Australian treasurer Wayne Swan hopes to see a retail market in Australian government bonds by Christmas 2012, The Australian reports. Treasury will also today release a discussion paper on ways to boost activity in Australia's corporate bond market. Treasury's discussion paper will address issues including streamlined disclosure requirements, directors' liability and protection for retail investors. A hefty new UK report on the 2008 failure of Royal Bank of Scotland concludes that the law should allow directors of failed banks to be automatically banned, fined and stripped of their remuneration, the Financial Times reports. The report, by the UK's Financial Services Authority, also says major bank acquisitions should require explicit regulatory approval. It criticises both RBS management and the FSA itself.