Ed Miliband urges bank branch sell-off to tackle 'broken' market
The UK's five largest banks are too powerful and should be forced to give up "significant" numbers of branches, Labour leader Ed Miliband has said.
The City had been "an incredibly poor servant of the real economy" for years and should be helping business grow and create jobs, he told activists.
A Labour government would "turn the tide" by creating two "challenger" banks to boost High Street competition.
David Cameron said the banking system was "much stronger" than in 2010.
The "big five" banks - HSBC, Barclays, RBS, Santander and Lloyds Banking Group - account for the majority of bank customers and lending.
In his speech at the University of London, Mr Miliband likened the "broken" banking system to the energy market, claiming "too much power is concentrated in too few hands" and this has had a detrimental effect on enterprise and jobs.
Under Labour, Mr Miliband said, "instead of you serving the banks, the banks will serve you."
"We need a reckoning with our banks, not for retribution but for reform," he added.
Bank of England Governor Mark Carney said earlier this week that he supported the view that a cap on banks' market share "would not result in substantial improvement to competition".
But Mr Miliband said a Labour government would instruct the Competition and Markets Authority to report within six months of the May 2015 general election what the limit on a bank's market share should be and the timetable for any sell-off of branches, which should be completed by 2020.
The opposition leader said he wanted to "establish for the first time a threshold for the market share any one bank can have of personal accounts and small-business lending".
Labour would also introduce a new National Credit Register for small and medium-sized businesses, to increase competition and improve lending to small business by allowing all banks access to comprehensive data on their credit histories.
Mr Miliband insisted politicians could not "duck" the issue: "I am not talking about whether we should have new banks but about how we make it happen...
"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.
"And we are not asking whether existing banks might have to divest themselves of a significant number of branches. We are asking how we make it happen."
Mr Miliband acknowledged the previous Labour government had made mistakes in bank regulation but said David Cameron was happy with a "steady as you go" approach to bank reform while more radical steps were needed.
Asked what he thought the maximum size of a bank should be, he said he would "not dream up a figure out of the air" and the regulators should decide.
The prime minister said the government had presided over the worst banking crash of recent times.
"We have been sorting out our banking system, which is much stronger than the mess we inherited from Labour," he said during a visit to Norfolk.
"But what we need is a whole economic plan - which builds the roads and railways, that helps the small businesses, which creates the jobs and cuts people's taxes - that is what this government is delivering."
Shares in RBS and a number of other banks fell marginally on Friday and the British Bankers Association said Labour's proposals would "undermine" the levels of service given to existing customers.
"Forcing people to change bank by selling their local branch is not what customers want," said its chief executive Anthony Browne.
Efforts by the Lloyds Banking Group to dispose of more than 630 branches last year foundered after Co-op pulled out of a deal due to financial problems.
But the firm has re-launched the TSB retail bank, with about 600 branches, while RBS has set out plans to revive Williams and Glyn's - which ceased trading in 1985 -to take over RBS branches in England and Wales and NatWest outlets in Scotland.