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* UK opposition Labour has called for caps on market share
* Banks say move would lead to 'banking for the few'
By Matt Scuffham
LONDON, July 8 (Reuters) - Plans by Britain's oppositionLabour party to limit the market share of individual banks couldleave some customers without banking services, the head of theBritish Bankers' Association (BBA) said.
Labour wants to inject more competition into banking bycreating two new banks and imposing a cap on the share ofpersonal banking and small business lending any singleinstitution can have.
The BBA's Chief Executive Anthony Browne said that wouldundermine the service that banks currently offer.
"We should be encouraging banks to take on new customers notdemanding that they dream up new ways of losing them," Browne,speaking to bankers at a dinner in the City of London, said.
"It doesn't take a genius to see where that could lead -worse customer service, and a focus on the customers who can paythe most. Banking for the few, not the many. A measure aimed atpromoting competition will instead stifle it."
Politicians from all parties want challengers to emerge tobreak the dominance of Britain's biggest five banks - LloydsBanking Group, Royal Bank of Scotland, Barclays, HSBC and Santander UK - whichaccount for more than three-quarters of lending to individualsand small businesses.
The Bank of England and the Financial Conduct Authority saidon Monday that more than 25 potential banking applicants hadbeen interviewed and five new banks had been approved sincerules for new challengers were eased last year.
Browne also said regulatory uncertainty was leading banks towithdraw from emerging markets. He said the demands placed onbanks to know their customer's customer, even in countries wheresuch records are not routinely kept, left them with littlechoice but to terminate relationships or risk big fines.
(Editing by Jane Merriman)
