LONDON The Labour Party would launch a consultation to break up state-owned Royal Bank of Scotland (RBS.L) into smaller local banks, the party said on Tuesday at the launch of its election manifesto.
This would “create new local public banks that are better matched to their customers’ needs”, from the broken-up Edinburgh-based RBS, Labour said in the manifesto launched by Labour leader Jeremy Corbyn.
A RBS spokesman said the bank was the fastest growing large bank in Britain last year and provided 24 billion pounds of new lending for the economy.
“We are delivering a simpler, safer and even more customer-focussed bank that generates returns for shareholders and the wider economy,” he said.
RBS is still more than 70 percent owned by the British government, nine years after a more than 45 billion pound bailout at the height of the financial crisis.
Almost a decade after RBS was first nationalised, some investors, politicians and academics have concluded that the bank is too damaged to bounce back in its current form. Since its first bailout, RBS has lost more than 52 billion pounds and has not posted an annual profit since 2007.
The former head of the Bank of England Mervyn King was among the most high-profile supporters of a plan to break up the state-backed lender to speed up its return to health.
RBS executives say that the bank has turned a corner in recent months and will have soon put the bulk of its problems behind it, revealing the profitable lender underneath.
Labour also said it would pass a law preventing banks from closing a branch where there is a clear local need, following hundreds of branch closures in Britain in recent years as the lenders cut costs.
(Reporting By Lawrence White and Andrew MacAskill; editing by Susan Thomas)