Lib Dems pledge to break up RBS

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The Liberal Democrats have backed proposals to break the Royal Bank of Scotland up 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, Lib Dem Treasury spokeswoman Baroness Susan Kramer called on the Treasury to consider breaking up both state-owned banks, RBS and Lloyds Banking Group.

She said: “We have one or two albatrosses. The notion that we were going to sell off the banks for a substantial profit very quickly has long gone out of the window. Is there a more constructive way to use them? I don’t know enough to say breaking them up is the answer but I feel strongly that the Treasury should be looking very, very closely at the option.”

The policy motion also calls for banks to increase transparency by publishing lending data by region and sector.

Where appropriate it will also seek to improve access to credit by forcing banks to fund community lending organisations.

The paper also supports relaxing capital rules for start-ups and providing an “off-the shelf package” for new banks including regulatory approval and a standard software package.

In addition, it wants the Financial Conduct Authority to have a statutory responsibility to foster banking diversity and supports the growth of new lenders.

Earlier in the day the conference also voted to pass a policy motion encouraging mutual and employee-ownership of businesses.