Commons investigation into banking competition
The renowned Commons Treasury Select Committee will today begin an investigation into the UK banking sector with particular emphasis on the high street lenders and the lack of competition in this area. When you consider that the likes of Lloyds bank control about one third of this market with Santander, the Spanish giant, also controlling a significant portion, it is perhaps no surprise that the authorities are now looking into the subject of competition. So what can we expect?
There have been, and continue to be, strong calls for the break-up of some of the larger UK banking operations and the sale of a significant amount of Royal Bank of Scotland's high street portfolio was expected to be the first such move. However, Santander has been left as the only credible bidder for the high street branches therefore strengthening the company's own position on the high street, possibly to the detriment of competition in this particular sector. Whether in fact Santander is allowed to expand in this area, especially in light of the Commons enquiry, remains to be seen.
It seems almost inevitable that the UK banking arena will be broken up in the short to medium term although how the government will encourage new entrants into the market place remains to be seen.
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