Miliband’s bank break-up plan will hit taxpayers’ shares, Labour admits

 
Club invite: Labour's Chuka Umunna Picture: Glenn Copus
Picture: Glenn Copus
17 January 2014
WEST END FINAL

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Labour today admitted that Ed Miliband’s vow to break up the Big Five banks is hitting taxpayer-owned shares in bailed-out RBS and Lloyds.

Shadow business secretary Chuka Umunna said: “I’m not denying in the short term that you may see a hit on the share price of these banks.

“I mean it is probably happening as we speak now.”

Shares fell overnight in both of the banks, which were rescued by being taken into public ownership after the 2009 crash.

Experts said taxpayer shareholdings in RBS were down £653 million by mid-morning compared with last night’s close, while the stake in Lloyds was worth £290 million less — a combined paper loss of more than £940 million.

Simon Walker, of the Institute of Directors, said Mr Umunna’s comments would also push shares down. “That’s going to hurt every future pensioner in the country because every pension fund has a lot of bank shares,” he said. “Politicians should not make careless remarks that affect share prices.”

Some banking industry insiders accused Labour of talking down the shares to derail the Chancellor’s plans to speed up a return of the banks to the private sector, which could net the Treasury a windfall for election giveaways.

But Mr Umunna said that he thought any reduction would be “in the short term”. In a major speech to Labour supporters at the University of London, Mr Miliband called for “a reckoning with Britain’s broken banking system”.

He set out plans, trailed last night after the markets closed, to limit the size of the biggest banks and force them to sell off branches. The British Bankers’ Association said: “We support increasing competition, but we do not think a cap on the number of customers a bank can have is the right answer.”

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