George Osborne Renews Backing for More Banking Competition
George Osborne renewed his commitment to promote more competition in retail banking on Wednesday and asked the UK's antitrust regulator to assess what effect mandatory branch sales by Lloyds and Royal Bank of Scotland will have on the market.
Lloyds and RBS must dispose of 632 and 315 bank branches respectively, in accordance with European state aid rules after the lenders received bailouts at the height of the financial crisis. Mooted deals by each bank to sell their respective estates to other banks have come unstuck over the past year, with a flotation of each now regarded as the likeliest option.
Earlier in the day the Office of Fair Trading had announced that it would bring forward a study into whether there is sufficient competition in banking services for small businesses.
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The review into banking services for small and medium-sized enterprises will examine whether they have access to services that are good value and meet their needs, competition in lending and whether they face particular difficulties when it comes to borrowing.
Mr Osborne's annual Mansion House speech in the City of London came hours after a report by the parliamentary commission on banking standards concluded that competition in UK retail banking was too weak.
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"Retail and business customers alike are often denied sufficient choice or access to enough information to exercise effective judgment," the report said.
The failure of the RBS and Lloyds divestments had made it "increasingly unlikely" that a significant new 'challenger bank' would soon emerge from them, it added.
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Mr Osborne is set to respond more fully to the banking commission's report next month, including its recommendations on how to improve competition.
Those included a call for the Treasury to establish an independent panel of experts to examine ways to improve current account portability.