Labour will refer high street banks to the competition authorities if it is elected in 2015, Ed Miliband, the Labour leader, is expected to say in a speech on Friday.
The aim is to have the review by the Competition and Markets Authority (CMA) complete within a year of the election, in the expectation that this could lead to a breakup of the larger high street banks, the Guardian reports.
It is hoped that this would provide a clear market structure to support better competition for customers and to address obstacles in the way of allowing new players to break into the market.
Labour also hopes it will help prompt a greater emphasis on German-style regional banking.
But the party would not indicate whether it had a specific cap on the size of a retail bank in mind. Labour officials would only say that a clearcut market share cap of 25% - as had been leaked on Tuesday night - was wide of the mark.
Labour's plans, however, took a hit when it emerged that Mark Carney, governor of the Bank of England, had cast doubt on any attempts to break up banks to bolster competition.
He also took aim at another Labour proposal, to limit bonuses paid to bankers at RBS to 100% of their salary. Carney told MPs that he agreed with the assertion of the parliamentary commission on banking standards that the EU bonus cap was a crude way to try to control pay.
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