Bank of England governor Mark Carney has all but torpedoed Labour leader Ed Miliband’s plans to shake up the banking sector.
Speaking before the Treasury Select Committee, Carney (pictured) said plans to break up the big banks would not necessarily create competition and branded bonus caps ‘crude’.
Miliband is set to announce his party’s economic policies today and was expected to want to appear tough on big business. However, Carney dismissed his plans regarding the banks, saying: ‘Just breaking up an institution doesn’t necessarily create a more intensive competitive structure.’ He also pointed out that any plans to prevent a bank having more than a 10% share of retail deposits, which has been taken from US law and mooted by Labour, risked making banks more likely to resort to wholesale funding, one of key systemic risks at the heart of the financial crisis.
When asked about the EU’s proposed 200% bonus cap, Carney branded the move ‘crude’ and ‘absolutely’ the wrong approach. Labour has been calling on the government to act to curb RBS’s bonus payouts.