Lloyds chief says corporate banking will not benefit from break-ups

The boss of Lloyds has criticised proposals to break up the biggest players in the corporate banking sector, saying it would not increase competitiveness.

Eric Daniels told the Treasury Select Committee the market was already "enormously competitive" and would not benefit from further regulation.

"I am not sure that dividing banks further would give a better outcome," he added.

Daniels' counterpart at Royal Bank of Scotland, Stephen Hester, described the proposal to regulate the size of banks as a "red herring".

Both men welcomed the idea of selling the government-owned shares in their banks, with Mr Hester declaring it would boost the economy's finances and act as "a symbol of Britain's recovery".

Currently, the government owns more than 40 per cent of Lloyds and over 80 per cent of Royal Bank of Scotland.

The two institutions were part-nationalised in October 2008 by the Labour administration at the height of the credit crunch. ADNFCR-2318-ID-800281367-ADNFCR