Labour calls for banks to sell branches
Labour is calling for major UK retail banks to sell hundreds of branches in order to create seven High Street banks rather than the current ‘big five’.
This would increase lending and competition in a market that is currently dominated by Barclays, Lloyds, HSBC, RBS and Santander, the party believes.
According to the Mail on Sunday, Labour leader Ed Miliband will make a speech today, calling for the sell-off of the bank branches in order to facilitate the creation of two privately run challenger banks.
Mr Miliband told the newspaper that a regulatory body for the banking sector should be created, similar to the British Medical Association, with a strict code of conduct.
He also wants stronger powers to be given to the Serious Fraud Office, which has formally launched an investigation into the rigging of inter-bank lending rates.
The government claims that plans are already underway to create the two new ‘challenger banks’ that Labour wants, namely Virgin Money and the Co-operative Bank.
The Co-operative Group is in the process of buying 632 branches from Lloyds Banking Group, a dealt that would increase the Co-operative Bank’s share of the retail banking market from 1 per cent to 6 per cent.
Virgin Money acquired 75 Northern Rock branches earlier this year, significantly strengthening its position on the High Street, and it plans to expand further by opening branches at railway stations.
Speaking on the Andrew Marr Show yesterday, Business Secretary Vince Cable said that banks are “throttling British industry” by not lending enough to businesses and this is harming the UK economy.
Mr Cable said: “The real problem at the moment is that the banks – because of their existing culture, which is frankly anti-business, obsession with short-term trading profits, not focusing on the long term – are throttling the recovery of British industry.”