There’ll be changes in a big way to High Street Banks near you. There’ll be a lot of horse-trading before the collossi of our now state-owned banks settle down again, privately owned, and much slimmer.
I’ll bet that Lloyds-TSB’s former board is kicking itself for giving in to Brown’s arm-twisting and sweet talk, for until they were pressured into taking over HBOS they were a perfectly sound company.
Christina
CITY AM
1.7.09
EU may force banks to sell off divisions
BANKING - ROB DAVIES
LLOYDS Banking Group and Royal Bank of Scotland may be forced to dispose of assets in order to meet EU antitrust rules, the European competition commissioner warned yesterday.
Speaking at the British Bankers' Association (BBA) annual conference, Neelie Kroes said that the two banks had an unfair competitive advantage as a result of receiving state aid.
“The need for competitive market structures is stronger than ever. The likelihood of significant divestments by RBS and Lloyds is strong,” she said.
Lloyds warned earlier this year that it may have to divest itself of units to win EU approval for its bailout, prompting speculation that it could sell its investment management arm Insight, or one of Scottish Widows and Clerical Medical.
Kroes said Brussels could force disposals to “ensure competition is not allowed to drain away”.
Earlier, BBA chief executive Angela Knight warned that an overzealous approach to regulation could constrain banks’ ability to lend, stifling the UK’s economic recovery.
“The danger is that an overlayering of multiple capital measures could result in an undue constraint being placed on the ability of banks to support households and firms through continuing to lend,” she said.
She pointed out that banks were already holding more capital than they had before the banking crisis and twice as much as is required by the international Basel standards.
Knight said regulatory changes would also need to be co-ordinated across borders to ensure that the UK does not find itself at a competitive disadvantage by imposing too strict requirements too soon.
And with Financial Services Authority chairman Lord Adair Turner waiting to speak, Knight called for an end to “tripartite infighting”, a reference to tension between Turner and Bank of England governor Mervyn King over which authority should dominate the regulatory
FINANCIAL TIMES 1.7.09
Kroes threatens bank break-ups
By Nikki Tait in Brussels and Patrick Jenkins and Jane,Croft in London
Lloyds Banking Group could be forced to sell its Halifax or Bank of Scotland branch networks to comply with European anti-trust rules, Neelie Kroes warned yesterday, as the European Union's competition commissioner stepped up her threats to break up two of the UK's four big banks.
Ms Kroes, who also warned that Royal Bank of Scotland was "highly dangerous" to Europe's single market, told the Financial Times at a London banking conference that Lloyds would have to make a "viable carve-out that won't lead to job cuts". She said that could well mean the forced disposal of Halifax or BoS branch networks.
Forcing Lloyds to sell any part of its HBOS operations would force Eric Daniels, Lloyds chief executive, to unpick the work he is doing, integrating the two banks' business processes and reducing the group's bloated cost base.
Between them, Lloyds and RBS have received more than £40bn in direct UK government assistance in the wake of the financial crisis. Under EU state aid rules, beneficiaries of government bail-outs are usually required to restructure their operations to compensate for the competitive advantage they have enjoyed.
Ms Kroes told a British Bankers Association conference that she believed Lloyds and RBS were no exceptions. "Having co-operatively agreed changes to several German banks, our attention must turn to UK banks," she said. "The massive aid received by banks such as Lloyds and RBS allows these banks to remain leaders in markets which are concentrated."
Lloyds, which is 43.5 per cent owned by the UK taxpayer, has a 30 per cent share of Britain's current account customers, following its rescue of HBOS. RBS, which is 70 per cent state-owned, dominates the market for lending to small businesses in the UK.
As a result, she said, "the likelihood of significant divestments by RBS and Lloyds is strong". Germany's Commerzbank and West LB were required to shrink their balance sheets by almost half.
Neither Lloyds nor RBS would comment last night. Lloyds has signalled it will shrink and might have to sell core UK businesses such as branches or loan books. It yesterday announced a further 2,100 job losses.
RBS has already hived off £240bn of loans as a preamble to selling them or running them down, but some analysts believe RBS may be forced to shrink its £2,000bn balance sheet more aggressively than that.
Additional reporting by George Parker
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