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
ebooksAn evocation of the conflict through the eyes of those who lived through it
Club legend Paul Scholes is scared United could disappear into 'the wilderness'
Life and Style
food + drink
Malky Mackay salutes the Cardiff fans after the 3-1 defeat at Liverpool on Sunday
footballFormer Cardiff boss accused of sending homophobic, racist and messages
Arts and Entertainment
Martin Amis: Taken to task over rash decisions and ill-judged statements
booksThe Zone of Interest just doesn't work, says James Runcie
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Business Analyst / Project Manager - Financial Services

£40000 - £45000 per annum + BONUS + BENEFITS: Harrington Starr: One of the mos...

Lead Business Analyst - Banking - London - £585

£525 - £585 per day: Orgtel: Lead Business Analyst - Investment Banking - Lond...

Service Desk Analyst- Desktop Support, Helpdesk, ITIL

£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Service Desk Engineer-(Support, ITIL, Software Vendor)

£30000 - £35000 per annum: Harrington Starr: Service Desk Engineer-(Support, S...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home