Break up top five banks, urges Miliband as public seek curbs

ED Miliband has revealed his “radical vision for banking” as a global survey revealed the public want greater regulation of the sector.

As the row over ethics in the wake of the rate-rigging scandal continued, Mr Miliband said he would like to see Britain’s top five high street banks broken up and forced to sell up to 1,000 branches to pave the way for two new privately run challenger banks to bolster competition in the sector.

The Labour leader also wants a new code of conduct for the banks to follow and a specialist banking unit set up with the Serious Fraud Office to tackle the “weak and fragmented” approach to fraud investigations.

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The announcement came as a 24-country study by market research company Ipsos MORI found that some 37 per cent of consumers around the world believe the banking sector has “too little” regulation.

Mr Miliband, MP for Doncaster North, said: “We need a revolution in British banking,”

Backing Mr Miliband’s proposals, Shadow Chancellor Ed Balls said the banking sector needed a “root and branch review” and the Government was “dragging their feet”.

The Morley and Outwood MP called for recommendations put forward by Sir John Vickers and the Independent Commission on Banking (ICB) to go “further and faster”.

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“It’s also about the culture of banks,” Mr Balls said. “There’s no proper code of conduct. It’s not enforced. Bankers can do what they get away with.”

Britain and the rest of Europe were singled out in the global survey as countries where views on banking regulation are most prominent.

Seven in 10 British consumers, 68 per cent, said there is too little regulation, a score closely followed by four other European countries, Spain, France, Belgium and Germany.

As the debate over banking culture raged on in Westminster, pressure continued to build on former Barclays boss Bob Diamond to waive at least part of a reported £17m golden parachute pay deal.

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The bank’s board is understood to have discussions with the Association of British Insurers, the trade group which represents billion of pounds of pension funds’ investments, over plans to open negotiations with Mr Diamond over his exit pay.

Business Secretary Vince Cable also launched an attack on the banking industry, describing banks as “anti-business and throttling the economic recovery”.

Claiming the Government’s reforms would not tackle the industry’s obsession with short-term trading profits, Mr Cable said quantitative easing alone was not going to kick-start the economy.

He said the Government was reforming the system with legislation to be introduced early next year by ringfencing retail operations from so-called casino banking, and Ministers would break the monopoly of the major players in the industry but it would not be enough to deal with the anti-business culture in banking.

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“We are under this Government creating a more competitive bank system,” he said. “This is new, it’s important but it’s slow.

“It doesn’t unfortunately deal with the real problem at the moment, which 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 actually throttling the recovery of British industry.”