Ed Miliband, leader of the UK’s centre-left Labour Party has accused the UK’s five largest banks of being too powerful, promising they would be subject to radical new limits under a Labour government.
He stated that these banks would be forced to give up a "significant" number of branches and there would a cap on all bank’s future market share.
Go deeper with GlobalData
The level of the price cap was not disclosed. Miliband proposed it would be set at a future date according to the Competition and Markets Authority after the May 2015 general election.
Additionally, Labour would create two "challenger" banks in order to instigate competition.
Miliband said: "It is not about creating new banks that control some tiny proportion of the market, but new banks that have a substantial proportion and can properly challenge existing banks."
The five banks in question are HSBC, Barclays, RBS, Santander and Lloyds Banking Group who account for 85% of current accounts in the UK as of 2010 and a large proportion of mortgages and small business lending.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe speech was particularly directed at small and medium sized businesses, Miliband promising that they would "no longer be serving the banks."
Katja Hall, leader of UK business group CBI, has responded with general support for encouraging competition but warns a market share cap is simplistic.
"Personal and SME banking have both received intense competition authority scrutiny in recent years. It’s not for politicians to dictate market structures – they must allow competition authorities to do their job."
She added that new banks were already emerging without being artificially created from existing branched.
The new plans have already come under fire from the Bank of England who dismissed as "crude", saying it was impossible to judge bank competition by market share alone.
Prime Minister David Cameron has insisted the banking system was far stronger since the Conservative Party had been leading:
"We have been sorting out our banking system, which is much stronger than the mess we inherited from Labour."
Related articles:
Bank of England dismisses Labour Party’s plans to shake-up UK banking industry
Current account switching numbers on the rise: UK Payments Council
