Plans for new banks to be created
The Government is planning to create three new high street banks by 2015 in a bid to boost competition in the sector, it has been reported.
The new groups will be set up through splitting nationalised bank Northern Rock in two, while parts of Lloyds Banking Group and Royal Bank of Scotland, in which the Government holds large stakes, will also be sold off.
Ministers are understood to be holding talks with the European Competition Commissioner about the move, and Chancellor Alistair Darling is expected to make an announcement to Parliament early this week.
But in a bid to increase competition in the banking sector, the Government will block the sale of any of the businesses to established UK banks.
Instead, potential buyers are thought to include Tesco and Virgin, which have both expressed an interest in setting up a retail banking arm, as well as foreign buyers, possibly from the US, Australia and the Middle East.
The new chains would be standard retail banks, focusing on offering savings accounts and mortgages.
The news comes after the European Commission last week approved Government plans to break up Northern Rock into two banks, one of which will be sold.
It has not yet been decided which parts of RBS and Lloyds would be sold off, although it is under stood the Government would have a strong say in the matter.
RBS is currently 70% owned by the taxpayer, while the Government has a 43% stake in Lloyds Banking Group.
