RBS Lloyds sell-off
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The UK market has fewer bank brands than most other countries and choice has fallen in recent years after the Spanish bank, Santander bought up Abbey, Alliance & Leicester and Bradford & Bingley, and Lloyds has taken over all of HBOS’s brands. However, as per a ruling from the European Commission, RBS will sell 318 branches while Lloyds will dispose of more than 600 branches over the next four years.
Assuming they are sold to new entrants, the effect of market concentration is clear - the concentration ratio should fall, and should encourage more competition. Names such as German insurance giant Allianz, Generali and Zurich, as well as more domestic players such as Tesco Finance and Virgin Money, are being mentioned as potential acquirers for the branches sold by RBS and Lloyds. Part of the reason for sale is to satisfy state aid rules by the competition authorities, to ensure a level playing field.
Whilst George Osborne is correct that this is no guarantee to getting credit flowing in the economy, it does however provide for a more competitive field when (if?) the recovery does begin - more choice will hopefully mean that the consumer becomes king again and prices for financial instruments head downwards.
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