Clegg calls for break-up of biggest City banks

LIBERAL Democrat leader Nick Clegg will try to break up large banks like Barclays and HSBC if he finds himself in government after the next election.

“The age of universal banking has to come to an end,” Clegg said as he launched his general election campaign yesterday.

Asked if he was making an implicit threat to break up the likes of Barclays and HSBC, Clegg said: “It’s entirely explicit... If we want to avoid this catastrophe happening again we have to deal on a much, much more fundamental level with some of the reasons why risk accumulated in the system in the way that it did.”

“If you’re an investment bank and you fail, you’re on your own. But if you want to provide retail services, we’ll regulate you like a hawk,” he added as he threw his weight behind a British version of the now-defunct US Glass-Steagall act that separated retail and investment banking.

Although the Liberal Democrat leader chose to give his speech at the Reuters building in Canary Wharf, he made little attempt to court the City.

He said: “There are nearly 100,000 square miles in Britain. For the last thirty years, politicians have been obsessed with just one of them: the City of London.

“We will never have a fair society while this is allowed to continue. The big, permanent change we offer is a shift away from the traditional over-reliance on the City of London and on financial services.”

Meanwhile, Clegg said the Lib Dems were ditching a key pledge to scrap student tuition fees in the next parliament because of the economic downturn. But he would not be drawn on what the party would do in the case of a hung parliament, saying “I am not a soothsayer”.