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UK's Miliband squares up to banks

Friday, Jan 17, 2014 - 01:59

Jan 17 - Britain's banks will have to shrink and sell off branches in order to improve competition, according to opposition leader, Ed Milliband. The pledge comes as his Labour party seeks to find fresh impetus ahead of parliamentary elections next year. David Pollard reports.

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Sixteen months to go. The UK's main opposition party is staking out its territory ahead of next years' parliamentary elections. Labour leader Ed Milliband playing on a theme dear to UK voters - their dislike of the banking sector. Big banks should not, he says, get any bigger. (SOUNDBITE) (English) ED MILIBAND, MEMBER OF PARLIAMENT AND LEADER, LABOUR PARTY, SAYING: ''Under the next Labour government, instead of you serving the banks, the banks will serve you once again.'' Miliband already wants to curb banker bonuses at the largely government-owned RBS. Now, he says a Labour government would look at how to set up two new banks to spur competition in personal and small-business lending. RBS and the other major UK banks would face a limit to their market cap or value. No figure's specified yet, but many believe it would restrict any one bank to 25 percent of the market. (SOUNDBITE) (English) ED MILIBAND, MEMBER OF PARLIAMENT AND LEADER, LABOUR PARTY, SAYING: ''Over decades, we've seen greater and greater concentration in our banking system. I am determined the next Labour government turns that tide.'' Banks would be forced to sell off branches where necessary - and that could be tricky, according to Michael Hewson of CMC Markets. SOUNDBITE (ENGLISH) MICHAEL HEWSON, CMC MARKETS, SAYING: ''Over the past five years, RBS and Lloyds have been looking to pare down the number of branches, and they've been having great difficulty in doing so. So even if Mr Milliband decides, gets his way, who's going to buy these branches? '' Hewson also questions the logic of hitting RBS - and its shareholders. SOUNDBITE (ENGLISH) MICHAEL HEWSON, CMC MARKETS, SAYING: ''Really, RBS is the one bank we do want to succeed, given the fact that we have got an eighty percent stake in it as UK taxpayers.'' A branch sell-off would be 'incredibly expensive', according to RBS. And - says Bank of England Governor Mark Carney - wouldn't necessarily make the sector more competitive. But Miliband's Labour party is ahead in the opinion polls right now. And - under the slogan 'cost of living crisis' - appears to be gaining confidence in its pro-consumer rhetoric.

UK's Miliband squares up to banks

Friday, Jan 17, 2014 - 01:59

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