The Liberal Democrats have backed proposals to break up the Royal Bank of Scotland into a series of local and community banks at its conference in Brighton.
The Sustainable Jobs and Policy paper was passed in a vote on the conference floor yesterday and commits the party to a wide range of banking reforms.
The policy motion, proposed by Parliamentary private secretary to deputy prime minister Nick Clegg, MP Duncan Hames, follows calls earlier this year from business secretary Vince Cable to split up the bank.
Last month, there were reports that the Government was considering buying the 17 per cent of RBS it does not own and forcing it to lend to small businesses.
Speaking at a Social Market Foundation fringe event on competition in banking last night, LibDem Treasury spokeswoman Baroness Susan Kramer called on the Treasury to consider breaking up both state-owned banks, RBS and Lloyds Banking Group.