Established banks could be made to sell off over 1,000 branches to enable at least two challenger banks to emerge and boost competition in the banking industry, under plans to be put forward by Labour today.
At a speech to the Co-operative bank, which is in talks with Lloyds to buy more than 600 of its branches to establish one new entrant into the banking industry, Ed Miliband will say he wants at least two “challenger” banks to be given a chance to break the dominance of the big five.
According to the Press Association, Miliband will also call for a banking code of conduct to be introduced modelled on the British Medical Association which would include powers to permanently strike off errant bankers.
He will also call on the Serious Fraud Office should have a new financial crime unit so the UK is no longer a “soft touch” on white collar crime.
After fractious Parliamentary debates last week over what kind of inquiry to have into banking in the wake of the £290m fine handed down to Barclays for Libor fixing, Miliband will set himself against Chancellor George Osborne by promising to back proposals contained in the European capital requirements directive IV to place a maximum ratio of 1:1 for bank pay and bonuses. It was reported over the weekend that Osborne intends to push back against the European Parliament’s proposed addition to the directive at a meeting of European finance ministers tomorrow.
He will also publish a report on Labour’s case for a British Investment Bank to help the business sector which was “having to compete with one hand tied behind its back” because of the lack of available credit.
He will say: “It will mean root and branch change for our banks if we are to deliver real change for Britain, if we are to rebuild our economy so it works for working people and if we are to restore trust in a sector of our economy worth billions of pounds and hundreds and thousands of jobs to our country.”
The Treasury select committee has repeatedly criticised a lack of competition in the banking industry with Conservative member Andrea Leadsom branding the current set up where Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC and Santander dominate the market an “oligopoly”.