Outlook: Swiss merger is no blueprint for Britain

Martin Taylor, chief executive of Barclays, is not quite a Eurosceptic, but he is a leading business opponent of the single currency, which he thinks could prove economically disastrous for Europe. That doesn't seem to have stopped him and his allies marshalling the arguments of monetary union in favour of allowing Barclays to takeover National Westminster Bank. He'll be at it afresh now that Union Bank of Switzerland has agreed merger terms with Swiss Bank Corporation to create what on most measures is the world's second-largest bank. If the Swiss are allowed to do it, why not us, he'll be asking government ministers.

Underlying the creation of this new Swiss banking behemoth is the perceived need to respond to and prepare for greater European union. The single currency ought to create a much more competitive and transparent European market in capital and financial services. This in turn creates further pressure for cost cutting and mergers, both domestic and cross border.

There is a certain irony in the fact that Switzerland is not part of the European Union, nor does it have any intention of joining the single currency. None the less, both banks have extensive operations throughout Europe, including the City, where they have competing investment banking operations. Both banks also fear they might fall prey to a foreign predator if they don't merge with a more friendly home player.

Exactly the same thought process plagues Martin Taylor and his counterparts elsewhere in the UK banking sector. Barclays and NatWest rank only number 19 and 20 in the world in terms of assets, and individually they will amount to little more than half the size of the unimaginatively renamed United Bank of Switzerland. If commodity banking, like other industries, is going to become dominated in the single market by just three to four big players, then what chance do these two and others have of surviving as independents?

This, however, is where the argument rather runs out of legs, for in truth the Swiss bank merger lends only very superficial support to the case for allowing Barclays and NatWest to merge. For a start, Switzerland is a country of just 8 million people. Its most famous exports are the cuckoo clock and the Swiss army knife. Even its skiing industry isn't much cop these days. When things get tough, it adjusts its workforce by throwing out the immigrants.

Switzerland's success as an economy, and that of her banks, is an international one. In Switzerland, it is genuinely possible to make the argument that the creation of national champions in the international arena should be allowed to override all domestic competition concerns. That's one of the reasons why Switzerland has become home to so many leading multinationals and so much international capital.

The same case cannot be made for Britain, with its much larger and more vibrant domestic market place. Barclays and NatWest already have market shares in small business and credit-card lending which might be considered unhealthy for a large economy of 60 million people. Do we really want to give them even greater power? In recent years, both banks have been poor at product innovation and in customer service. In all yesterday's global banking speak and Swiss cost cutting zeal, there was not a single mention of what this merger might do for the customer. We can expect even less if Barclays were to consummate its desires by merging with NatWest.

The Government should put a stop to the fevered imaginings of our leading bankers by making a clear and unambiguous statement that further large scale domestic consolidation in the banking sector will not be tolerated. If there are any bankers who really believe in the Euro-dimension, they should have the courage of their convictions and attempt a cross-border merger. Now why does that possibility seem just so unlikely?

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
life
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
i100
News
people
ebooks
ebooksA special investigation by Andy McSmith
Sport
Chelsea manager Jose Mourinho
footballThe more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
News
i100
News
business
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee