Banking reorganisation tipped to expand competition

Competition in the financial services market – which may include personal loans – will be increased by government moves to break up banks in which it has a large stake, it has been predicted.

Such moves in any industry tend to keep prices down and “stimulate innovation”, said spokesperson for PricewaterhouseCoopers John Hitchins.

While this will not extend as far as there being six major providers of every kind of financial service, there will be substantial choice, he suggested.

“I think we do still have, and will have a bit more of as a result of this announcement, a significant amount of competition in particular areas,” the expert remarked.

Lloyds Banking Group and the Royal Bank of Scotland will be broken up under plans announced by the government this week.

The announcement follows news last week that Northern Rock will be split into two parts, one of which will hold its toxic assets, while the other operates like a normal bank ahead of an eventual sale back to the private sector.

Leave a Reply

Your email address will not be published. Required fields are marked *