Ed Miliband proposes breakup of bank monopoly
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Ed Miliband is set to propose a major shakeup of the banking sector. He will announce plans to cap the market share any one bank is permitted to have and in doing so, break up the power of the ‘Big 5’.
Labour have struggled to land any real blows on the Chancellor with their economic policies except by attacking the monopolies average Britons feel exploited by. Ed Miliband’s major success of the last 12 months was his promise to freeze energy prices, and despite Conservative attempts to dismiss it out of hand as unworkable, it has proved a potent weapon in the economic debate.
If the energy ‘Big 6’ are seen as a profiteering cartel, then the fact that the leading five banks account for 90% of market share must surely be a matter for grave concern.
The idea would be to limit the market share of individual banks, and thus create the conditions for two new major players to enter the arena. With absurdly backward practices still prevalent in banking like the time it takes for credit to clear, and with banks still under-lending despite being the beneficiaries of billions in free money from the Bank of England, Mr Miliband hopes that the competition new ‘challenger’ banks would generate would benefit the public.
Bank of England Governor Mark Carney has already sounded less than enthusiastic about the scheme, saying “Just breaking up an institution doesn’t necessarily create a more intensive competitive structure.”
Critics of the plan say that should it ever become reality, the government will struggle to recoup their ‘investments’ in RBS and Lloyds, that HSBC are likely to relocate to Hong Kong, and that there simply are not hordes of eager investors waiting in the wings for the opportunity to set up a new retail bank.
This may perhaps be true; the recent selloff of Lloyds branches was far from oversubscribed. And the public are notoriously reluctant to go through the rigmarole of changing banks, often resigning themselves to poor service. But this could still be a wildly popular plan, simply because it pierces the indolent arrogance of the major banks who seem more than content to continue exploiting the public in return for shocking service.