James Moore: An Aussie misstep, a little less competition

Outlook In the early hours of yesterday morning the management of National Australia Bank did more to improve the image of British bankers at the stroke of a pen than if the entire corps of London's financial PR industry had forsaken the habits of a lifetime and decided to do some real work, as opposed to prospecting for clients over lunch.

That was when NAB released the information that after several years of attempting to sell the Clydesdale and Yorkshire Banks it would instead shut up shop in much of the South of England, axing 1,400 jobs in the process. By releasing the information in the small hours of Monday when most of the 1,400 will have been in bed, NAB's bosses in Melbourne managed to make their pommie rivals look almost human.

Its move is worrying for reasons in addition to jobs, however. While NAB's British banks were little more than flies buzzing around the trunks of the industry's elephants, they were at least there. They offered products – some quite competitive – and services to those willing to winnow them out which will now no longer be available. The withdrawal of these banks back to their Northern heartlands means the competition will be reduced.

With the sale of Lloyds Banking Group's "Project Verde" branches to the Co-op all but dead and buried, its rival bidder NBNK unproven and a possible flotation looking like a last desperate throw of the dice, it is hard to see much to worry the big four (five really, if you include Santander UK) from that quarter. Meanwhile Tesco's attention is focused on fixing its core supermarket business because it's no good offering your customers new services like banking if they're turning to your competitors for their groceries.

Virgin Money is still around, having bought up Northern Rock, but for all the impassioned political bluster about increasing the amount of competition and creating new "challenger" brands, the reverse has been happening. It looks set to continue.