Existing institutions like Royal Bank of Scotland (RBS) and Lloyds could also be forced to sell off branches to boost competition within the industry.
Labour would also introduce new thresholds barring banks from having too large a share of personal accounts or business lending, in a bid to ensure they were never again seen as 'too big to fail'.
In a significant bolstering of his argument on the cost of living, the Labour leader will warn that households will continue to suffer without significant reforms to the UK's banks.
The speech has already been billed as a key test of Labour's argument on the economy.
Mr Miliband will say that rising wages alone will do little to solve the problems facing millions.
Without reform of the banks high housing costs, low overall salaries and insecure jobs will all still continue to bedevil the UK economy. To counter that trend, small and medium sized companies must get the loans they need to expand and take on new staff, he will say.
In the speech, at the University of London, Mr Miliband will blame a lack of competition for, among other things, a "calamitous" £56 billion fall in lending to business since May 2010.
He will say: "After decades of banking becoming more and more concentrated, Labour will turn the tide."