One former City minister has called for two of Britain’s biggest and best business bank account providers to be broken up.
Lord Myners recently wrote an article for the Financial Times where he recommended splitting up both partly nationalised banks. Lord Myners contended in his article that both Lloyds TSB and RBS have become much too large.
Myners was one of the key figures in the bank bailout in 2008. Despite his role in the multi billion pound payouts to both banks, he is now calling for at least one of them (if not both) to be split apart.
RBS could be sundered from its affiliate NatWest in a bank breakup. Likewise Lloyds TSB could cut its ties with Halifax. The result would be four completely independent banking institutions.
A banking commission is currently investigating the viability of such a route. However the commission can only make recommendations to the Government. Ministers are under no obligation to take up any proposals the commission may submit.
Lloyds currently controls 29 per cent of the current account market in the UK. It also has a 23 per cent stake in the mortgage business.
RBS does not have quite so large a share in comparison but it still handles 19 per cent of UK mortgages. Its current account figures lag only slightly behind its competitor. Both banks make up half of the so-called ‘Big Four.’ Taken together 73 per cent of all banking business in Britain goes through these institutions.
Lord Myners wrote that such dominant companies in the financial market could be dangerous to the welfare of consumers. Society will suffer badly if these banks fumble or fail, he said in his article. He also added that the future of the market will require banking institutions that are less monolithic.
Lord Myers feels that in order to accomplish this goal, the dissolution of certain bank mergers may need to be made.