Ed Miliband will unveil plans to cap the size of major retail banks in a speech this week that could mean the Big Five being forced to sell off High Street branches.
Labour’s leader aims to repeat the success of his conference attack on the energy giants by pledging to impose greater banking competition if he wins power.
Party sources said claims that banks would be capped at a quarter of the market share and sell “hundreds” of branches were “wide of the mark” but did not deny either idea completely. The aim would be to let smaller banks gain a toe-hold in town centres.
“We have a situation right now where a lot of customers feel, what’s the point of switching because they’re all the same,” said shadow treasury spokesman Chris Leslie. “Apparently you’re more likely to get divorced than you are to change bank account.”
Labour sought to push the issue of bad banker behaviour back up the agenda in advance of the speech today by challenging George Osborne to block any request by the state-owned RBS to double the size of its investment bankers’ bonuses.
The Chancellor is in a dilemma because the public would react with fury if he gave personal approval to a bumper bonus season at a bank bailed out by the taxpayer. But City circles expect RBS to seek his approval as shareholder in order to stop high-perfoming key staff leaving.
“Are we really going to say that they should go up to 200% of bonuses?” asked Mr Leslie. “An astonishing thing if that’s what the Chancellor is going to do.”
Tory MP Mark Garnier, a member of the Treasury committee at the Commons, defended bonuses. He said: “Its actually a compensation for enterprise ... Let’s not forget, investment banks do a lot of good as well as bad.”
Friday’s speech is seen as critical to Labour after a fall in the opinion polls this week.
Tory sources said: “Labour’s failure to regulate the financial system led to the worst banking crash in our history, causing the worst recession in a century. So this is another problem Ed Miliband is talking about that was created by the Labour government he was at the heart of.”
