High Street Banks To Be Split Up
Alistair Darling, the Chancellor of the Exchequer, announced yesterday that two of the UK’s biggest high street banks are to be split up in order to comply with competition rulings from the European Union.
The Royal Bank of Scotland (RBS) and the Lloyds banking group are both to be broken up into smaller companies and the more profitable parts of the establishments will be sold off to new owners. The National Bank of Australia and the Spanish bank Santander are both expected to be involved in the deal.
Both Lloyds banking group and RBS have been partly nationalised with loans from the government to bail them out during the recent financial crisis.
The merger between Lloyds TSB and the Halifax was approved by the government only just one year ago, but now the Chancellor has said that the group must be split up in order to provide more competition in the banking sector and in particular to try and get banks to start offering personal loans and new home owner loans to individuals once again at competitive rates. The selling off of the more profitable parts of Lloyds and RBS will, of course, go some way to paying off the government loan and clearing the debt to the tax payer, although any future profits are likely to go to companies outside the UK.
A spokesperson for the British Banking Association (BBA) said “The Chancellor’s announcement that there is to be a restructuring programme for those banks where there is a major public stake is neither unexpected nor surprising. The UK needs a successful banking sector and any plans must ensure the UK remains both internationally competitive and should help maintain our financial services industry’s leading global position. We look forward to seeing the details of the proposals in due course.”
