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UK government announces plans for banking carve up

The UK government has today announced plans to force Lloyds bank and Royal Bank of Scotland to disinvest themselves of various banking networks over the next four years as a means of increasing competition in the UK banking sector. This will see more companies operating in the UK financial sector but is seen by many as a case of trying to pre-empt EU Commission conditions with regards to state aid.

This is by far and away the largest revamp of the UK financial sector for many years and will ultimately bring in more competition in the short to medium term although the long-term situation is not as clear. Even though the UK government is attempting to grab the glory associated with these changes there is no doubt that the EU Commission is behind today's move and the UK government is looking, at least in the eyes of the public, to regain control.

It will be interesting to see if any new entrants to the financial market show their hand in the short to medium term as Virgin Money and Tesco Finance are the only two parties to show any interest at this point. If there is little competition for the assets which are to be sold off then this could see potential predators grabbing bargains.

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