Ex-City minister calls for breakup of RBS and Lloyds Group
Royal Bank of Scotland and Lloyds Banking Group are “monolithic institutions” that dampen competition and should be split up, the former financial services minister in the last government said on Monday.
LLoyds merged with HBOS during the depths of the financial crisis in October 2008, and was later rescued by the government, which owns 41 percent of the group. RBS was also propped up by the former Labour government that month.
“The future lies in less monolithic institutions, with more fluid entries into and out of the banking sector,” Paul Myners said in a column piece in Monday’s Financial Times.
“In practice, the banking commision must therefore give proper consideration to splitting one or both of Lloyds Banking Group and the Royal Bank of Scotland,” he said.
Britain appointed the Independent Commission on Banking (ICB) this summer — a panel of five heavyweight former bankers and other professionals — to assess whether its banks are too powerful and how to boost competition.
At a hearing into retail banking earlier this month, the chief executive of Lloyds said breaking up Britain’s banks would not boost competition.
“This is an enormously competitive market and I am not sure that dividing banks further would give a better outcome,” Eric Daniels told parliament’s Treasury Select Committee.
“Concentration does not lead to lack of competition,” Daniels said.
Myners said it would take too long for new entrants to change the banking industry’s concentration because of the dominance of Britain’s six biggest banks in current accounts.
“I am told neither group has irreversibly integrated their systems, so demerging is possible,” Myners said.