Labour leader Ed Mililband is to say the ‘big five’ banks must sell off a “significant” number of branches to make room for at least two challenger banks, in a speech later today.
According to the BBC, in his speech at the University of London today, Miliband will promise to create two or more challenger banks which have a “substantial proportion” of the market and can compete properly with the existing large players.
The big five – Lloyds Banking Group, Royal Bank of Scotland, Santander, Barclays and HSBC – currently have 90 per cent of the current account market.
Miliband will say a Labour government would instruct the Competition and Markets Authority to report within six months of the May 2015 general election on a limit on banks’ market share and the timetable for any sell-off of branches. Branch sell offs should be completed by 2020, he will say.
Miliband will say: “Of course, financial services is an important industry in itself. But for an industry that calls itself a ‘service’, it has been an incredibly poor servant of the real economy, not just since 2010 – or 2008 – but for decades in this country.
“We need a reckoning with our banking system, not for retribution, but for reform.”
He is expected to say that Britain should follow the example of the US and establish a threshold for the market share any one bank can have of personal accounts and small business lending.
Labour would also introduce a new National Credit Register for small and medium-sized businesses, which it claims would increase competition and improve lending to small businesses by allowing all banks access to comprehensive data on their credit histories.
Earlier this week, Bank of England governor Mark Carney rejected the proposals to break up the big five banks claiming it would not boost competition and could lead to financial instability.