More uncertainty for bank workers

There were fears of further uncertainty for embattled bank workers after today's report suggested Lloyds Banking Group should shed more of its branch network to improve competition in the sector.









The Independent Commission on Banking (ICB) made clear in its interim report that the decision to wave through Lloyds's rescue takeover of HBOS was a mistake, but would now be too costly and complicated to undo.



Instead, the five-strong panel of grandees at the ICB wants Lloyds to offload even more of its branches and mortgage and savings business - saying the current plans to appease European concerns on state aid do not go far enough.



While the bank may be breathing a sigh of relief that the worst case scenario of a full-blown merger reversal appears off the cards, there are concerns that staff at the part-nationalised bank will once again pay the price.



Trade union Unite was scathing in its response to the ICB's report.



David Fleming, Unite national officer said: "The recommendation to sell off bank branches will not bring radical change, but simply brings more insecurity for working people in the finance sector and often harms communities where the bank branch closure means many will not have access to local financial services."



Around 27,000 job losses have already been announced by Lloyds since its ill-fated HBOS takeover, which left the combined group with mammoth bad debts and saw it turn to taxpayers for a bailout that has ended with it being 41% owned by the State.



But the deal succeeded in giving Lloyds unrivalled power in the retail banking sector, with 30% of personal current accounts and 21% of the savings market.



The ICB said competition had been "seriously weakened" since the financial crisis and that challengers to the big banks had mostly disappeared.



It believes measures agreed with Europe are insufficient to break Lloyds's stranglehold on the sector.



The bank has committed to offloading 600 branches and at least 4.6% of the UK personal current account (PCA) market and 19.2% of its retail mortgage assets.



The ICB said that even after the divestments, Lloyds would still account for 18% of savings business, 25% of current accounts, 19% of mortgage lending and 21% of unsecured personal loans - remaining a clear leader in the market.



It added that any new entrant buying the Lloyds business would struggle to make its mark, with only 4.6% of UK current accounts and around 5% of mortgages.



It would also have a weak balance sheet and immediate funding issues stemming from HBOS's high reliance on wholesale funding markets before its collapse.



"This picture suggests that the Lloyds Banking Group divestiture would be unlikely to give rise to a strong challenger, at least in its early years," said the Commission.



It added: "The Commission's current view is that the planned Lloyds divestiture is insufficient and that it will have a limited effect on competition unless it is substantially enhanced."



It is suggesting the Government works with Lloyds to increase the divestments.



"An enhanced divestiture could give an improved outcome for competition, both by reducing market concentration and by strengthening the divestiture's ability to act as a challenger. These competitive pressures should lead to improved prices, products and choice for customers, and to greater efficiency and innovation in the long run," said the ICB.



It does not rule out the possibility of a competition inquiry by UK authorities if an enhanced programme of divestments fails to transpire.



What is not certain is how much further Lloyds needs to go to pacify the ICB - or what further uncertainty is faced by staff.



Workers are already unclear over what will happen after the current planned branch sell-offs. While staff will transfer to any buyer, it is unknown how many will eventually be kept, given that this is dependent on whether or not the buyer has an existing back office function or if it already has a branch network.



The ICB's interim findings will now go out for further consultation, but attention will be focused on exactly what the ICB has planned to curb the power held by Lloyds in the UK.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future