Darling makes plans to split up state-run banks

Nov 2 2009 by Karen Dent, The Journal

THE three state-controlled banks – including Northern Rock – are to be broken up for sale to improve competition and recoup taxpayers’ cash from the bail-out of the sector.

Chancellor Alistair Darling said he wanted to see three new high street banks created within the next few years as Northern Rock, Royal Bank of Scotland and Lloyds Banking Group are sold off.

The “viable” part of the completely nationalised Northern Rock could be sold by the end of this year, he said.

Private investment was also being sought to reduce the taxpayers’ exposure to RBS and Lloyds, which are both majority-owned by the state.

He indicated that different parts of both banks would be sold separately to newcomers to the sector as part of its “reconstruction”.

Mr Darling said: “Unless we get competition we are going to end up with half a dozen big providers which would be a big reduction in choice and that would not be acceptable.”

The new-look banking sector would take shape over three or four years, he said, indicating that the plans could be at the mercy of an incoming Tory administration.