Editorial: What do we want from our banks?

The Co-op's plan to buy the 630-plus branches of taxpayer-owned Lloyds Banking has come a cropper, but the monopoly of the Big Five must be broken

Share

Once again, attempts to introduce greater competition into Britain’s top-heavy high street banking sector have failed to deliver.

This time it is the Co-op. The group has decided that it cannot proceed with the plan to buy the 630-plus branches of taxpayer-owned Lloyds Banking Group that the European Commission has said must be sold to comply with state aid rules.

Nor is the Co-op deal the first to come a cropper. Last autumn, Royal Bank of Scotland’s long-running talks with Santander – for the sale of a similar number of branches, for the same reason – also fell through. Alternatives will now be pursued. RBS already has plans to float its hived-off division on the stock exchange; Lloyds is expected to do the same. But the implications are no less concerning for all that.

Few would dispute that Britain’s retail banking sector is deeply flawed. Four in five current accounts and more than two-thirds of mortgages are held by just five big players. Although there have been a few start-ups – Virgin Money and Metro Bank, for example – in recent years, they are too tiny to exert real competitive pressure.

By far the most promising challenger was the Co-op. Indeed, the group was already picking up customers turned off by the scandals and poor service that have dogged the Big Five. And the transfer of 4.6 million customers from Lloyds would have been a significant boost. The problem, says the company, is that the sums simply do not add up.

Thus, the collapsed Co-op deal encapsulates the insoluble tensions that beset our post-financial-crisis banking industry. We want more competition and more small players; but the already-onerous regulatory burden is only being increased. Similarly, sluggish lending, particularly to small businesses, is bemoaned even as banks are directed to shore up their balance sheets and to take fewer risks. And all this against a background of sustained public disdain for bankers and all their works. Is it any wonder, then, that so few are either willing or able to take up the challenge?

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Business Analyst,HR,Halifax,£400-450pd

£400 - £450 per day + competitive: Orgtel: My client, a leading bank, is curre...

Project Coordinator - Cisco Partner - £110 p/d

£110 per day + competitive: Orgtel: Project Coordinator (SC Cleared), Cisco Go...

Recruitment Consultants - IT - Trainee / Experienced

£20000 - £30000 per annum + OTE £40-50K first year: SThree: The SThree group i...

Primary teachers needed for supply in Huntingdon

£21000 - £35000 per annum: Randstad Education Cambridge: Primary teachers need...

Day In a Page

Read Next
 

August catch-up: genius of Apple, fools and commercial enterprises, and the Queen

John Rentoul
Tory whips were anxiously ringing round the “usual suspects” following Douglas Carswell's defection to Ukip  

i Editor's Letter: Douglas Carswell's defection

Oliver Duff Oliver Duff
Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone