Lord Myners: Corporate banking must be more competitive

The former City minister Lord Myners has said the corporate banking sector must be overhauled by breaking up the biggest institutions.

Writing in the Financial Times, he argued the UK money management industry is too concentrated in the hands of a few major players and is one of the world's "least competitive" systems.

Lord Myners refuted the idea that large institutions make for a more stable system, explaining each one represents too great a proportion of the UK's wealth, making it very difficult for new firms to enter the market.

Diversity is better, he went on, adding: "Inadequate competition can produce excess profits, poor customer service and a dearth of innovation, none of which are likely to create a stable system."

The Labour peer concluded the UK finance industry needed more small banks funded by a greater amount of capital and suggested the Independent Commission on Banking must create a more competitive system to deliver growth in the coming years.

Eric Daniels and Stephen Hester, the bosses of Lloyds and Royal Bank of Scotland respectively, recently argued that breaking up the country's biggest banks would not deliver significant benefits. ADNFCR-2318-ID-800286863-ADNFCR