Outlook Let's not get carried away with the news that Lord Levene and Sir David Walker plan a stock market-listed vehicle that will bid for banking assets such as Northern Rock and the Lloyds Banking Group branches that the European Union has said must be sold off to satisfy competition laws. There has been a great deal of talk about new entrants to the banking sector since the end of the credit crisis, but not too many have actually materialised.
Still, for all the marketing nous of a venture such as Sir Richard Branson's Virgin, which continues to talk the talk on banking, it must be said this venture looks the most credible new entrant yet. Lord Levene and Sir David come with serious City pedigrees and real banking experience, and they appear to have secured the backing of some heavyweight institutional investments.
In the end, the more competitors for these assets the better – both from the perspective of taxpayers, to whom the purchase prices will mostly remit, and for the banks' customers, who have not been well served by the stranglehold that the largest institutions have held on the marketplace in recent times.
In fact, the first auction of the state-backed banks' assets has been a little disappointing, with Santander now the only man left standing in the battle to buy 300 branches from Royal Bank of Scotland, also the subject of an EU disposal order. Not that there is anything wrong with Santander as a potential owner for the RBS assets, but it hardly represents an injection of new competition in the banking market.
Where there have been new entrants, the results have been encouraging. Aldermore, for example, has already lent substantial sums to small and medium-sized businesses. The prospects for Metro Bank looking promising too.
With the greatest of respect to these ventures, however, they are operating at the margins, and will be quickly leapfrogged by the acquirers of the state banking businesses. The sale of Northern Rock, in particular, represents a fantastic opportunity for a brand new player to make a real impact on the retail banking sector.
Lurking in the wings, meanwhile, is Tesco's personal finance operation, which already has a branch network its rivals would die for. And if the supermarket really goes for it, as it has been promising, we really might see some competition for retail customers.Reuse content