The BBC current affairs programme Panorama will this evening make a number of damaging accusations with regards to banking charges in the UK. Unusually, this has prompted a pre-emptive strike from the British Bankers Association (BBA) which issued a statement refuting a number of the allegations contained in this evening's program. So what is going on?
As the number of bankrupts in the UK continues to grow there is concern that many banking operations in the UK are preventing the opening of very simple and non-credit-based bank accounts. There is no legal reason why a bankrupt should not be able to have access to simple banking operations with no credit and no overdraft facilities are available. So why are UK banks doing this?
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?
In light of the £50 million deal between US private equity company JC Flowers and the Kent Reliance Building Society, the Building Society Association has today called upon the government to change the regulations which are stifling fundraising for building societies. Due to the mutual set-up of building societies they are unable to issue new shares, as UK banks and other financial companies can, and therefore have to issue new innovative investment tools or else leave the sector.
The announcement that US buyout specialist JC Flowers is looking to take a 49% stake in Kent Reliance Building Society has certainly caught the attention of many investors and financial experts in the UK. The £50 million investment will see the company take a significant stake in the building society and indeed there is speculation that further deals of a similar nature are in the pipeline. But is the UK building society sector ready for change?
The UK building society sector will this week come under the spotlight with news that JC Flowers, a major US private equity company, is set to take a 49% stake in the Kent Reliance Building Society in exchange for a £50 million investment. It is believed that liquidity problems within the sector could also see up to a further six building societies receive the same type of investment from the American giant, something which could dramatically change the landscape of the UK building society sector.
Last week's announcement by Lloyds Bank would appear to have sounded the death knell for free banking in the UK with customers now being charged a monthly fee to have in place overdraft facilities. While the issue of "free banking" has been something of a myth in all honesty, it does look as though officially more and more customers will be charged a monthly fee to obtain access to banking facilities.
Lloyds Bank, the majority taxpayer owned financial giant, has today announced a range of charging changes which will impact customers in the short to medium term. The bank will scrap the £15 "unplanned overdraft fee" in December 2010 and replace this with a basic £5 "overdraft usage fee" for customers who slip into the red, whether planned or unplanned. The "returned item fee" will also be reduced from £20 to £10 and customers will be able to access a fee free and an interest free overdraft.
The inside word appears to suggest that Santander, the Spanish banking giant, is on the verge of acquiring 318 Royal Bank of Scotland branches put up for sale by the company. Despite earlier rumours that the company had bid of around £1.8 billion it seems that the final asking price will be around £1.65 billion with Santander the only bidder left at the table. However, it looks as though the deal may well take up to 18 months to complete!
Despite the fact that the UK banking sector is one of the most competitive in the world it would appear that very few people in the UK would actively consider changing their banking arrangements to take advantage of better deals elsewhere. Surveys have shown that the vast majority of people in the UK are very happy to remain with one bank for their whole of their working life despite the fact they could be losing out on offers and deals. So why is there a reluctance to change your bank account?
