SHARES in the predominantly state-owned Royal Bank of Scotland and Lloyds have come under pressure as Ed Miliband unveiled plans yesterday to break up Britain's big five high street lenders. Labour acknowledged the two banks would take a shortterm "hit", but insisted reform was necessary to inject competition into a "broken" banking system and increase the flow of credit to small businesses. But Treasury Minister David Gauke said the Labour leader's intervention was not helpful - amid reports that it could delay their planned return to the private sector. Shares in RBS and Lloyds were each down about one per cent on the FTSE 100 Index following Mr Miliband's speech at the University of London . "I notice that a lot has been wiped offthe value of the shares of those banks this morning, so I don't know how helpful that is in terms of the national interest because that's UK taxpayers who have lost out, " Mr Gauke told BBC News . "We'll see over the longer term, but I think it is something like [pounds]1bn thismorning." Earlier, Shadow Business Secretary Chuka Umunna acknowledged that Labour's plan would affect the value of RBS and Lloyds, but said the economy would benefit in the long run. "I'm not denying in the short term that you may see a hit on the share price of these banks - it's probably happening as we speak now. But the reason we are doing this is so that we can grow our small businesses, " he told the BBC Radio 4 Today programme. In his address, Mr Miliband confirmed that a Labour government would impose a USstyle cap on the market share that any one bank can have in personal accounts and small business lending. The Competition and Markets Authority would be instructed to report within six months of a Labour election victory with proposals to create a least two new sizeable and competitive banks to challenge the existing high street lenders. With only four banks controlling 85 per cent of small business lending, Mr Miliband said the financial services sector had proved a "poor servant" of the real economy. "We need a reckoning with our banks, not for retribution but for reform, " he said. "I want to send a message to all the small and mediumsized businesses of our country: under the next Labour government, instead of you serving the banks, the banks will serve you once again."
Most Popular Stories
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Apple, HP, Intel May Take a Hit from Slowdown in Smartphone Sales Growth
- Elizabeth Vargas' Husband Marc Cohn Addresses Rumors
- Keurig Adds Peet's coffee, Alters Starbucks deal
- FDIC Files Lawsuit on Behalf of Banks Allegedly Hurt by Libor Scandal
- Motley Crue's Nikki Sixx Marries Model Courtney Bingham
- U.S. to Relinquish Gov't Control Over Internet
- Chinese e-Commerce Giant Alibaba Gears for IPO in U.S.
- Some California Cities Seeking Water Independence
- Will Missing Malaysian Jet Prompt Aviation System Change?