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Bank sales 'could raise charges' | Bank sales 'could raise charges' |
(about 15 hours later) | |
Bank customers could face more branch closures and higher charges, despite government plans to increase competition, it has been claimed. | Bank customers could face more branch closures and higher charges, despite government plans to increase competition, it has been claimed. |
Later this year the Treasury will start selling off nearly 1,000 High Street branches which are currently owned by the taxpayer. | Later this year the Treasury will start selling off nearly 1,000 High Street branches which are currently owned by the taxpayer. |
But there are fears that many of those will fail to find buyers, and will be forced to close. | But there are fears that many of those will fail to find buyers, and will be forced to close. |
The Treasury says the sales will lead to more choice for bank customers. | The Treasury says the sales will lead to more choice for bank customers. |
Lloyds will have to sell 600 branches, including 185 TSB branches in Scotland. | Lloyds will have to sell 600 branches, including 185 TSB branches in Scotland. |
Royal Bank of Scotland has been told to sell over 300 branches. | Royal Bank of Scotland has been told to sell over 300 branches. |
The government will also be selling off all 76 branches of Northern Rock. | The government will also be selling off all 76 branches of Northern Rock. |
The UK is soon to get its first new High Street banking name for some time | The UK is soon to get its first new High Street banking name for some time |
The idea is to attenuate the power of the big banks, and to promote competition amongst new entrants. | The idea is to attenuate the power of the big banks, and to promote competition amongst new entrants. |
But Derek French, a former Natwest executive, who now campaigns to keep High Street branches open, fears that many of those branches will fail to attract a buyer. | But Derek French, a former Natwest executive, who now campaigns to keep High Street branches open, fears that many of those branches will fail to attract a buyer. |
Given that the number of banks has declined by 40% since 1990 anyway, the economics do not look attractive. | Given that the number of banks has declined by 40% since 1990 anyway, the economics do not look attractive. |
"I think we shall see fewer banks on the High Street rather than more," he said. | "I think we shall see fewer banks on the High Street rather than more," he said. |
"There will effectively be less choice on the High Street than there is today." | "There will effectively be less choice on the High Street than there is today." |
New entrants | New entrants |
But there is plenty of evidence that some banks not previously seen in the UK are keen to set up shop. | But there is plenty of evidence that some banks not previously seen in the UK are keen to set up shop. |
Over time I would hope we will have hundreds of branches, rather than a handful of branches Jayne-Anne Gadhia, Virgin Money What next for bank customers? | Over time I would hope we will have hundreds of branches, rather than a handful of branches Jayne-Anne Gadhia, Virgin Money What next for bank customers? |
A new banking start-up, Metro Bank, is about to open its first branch in central London. | |
The hoardings outside already proclaim "love your bank," a sentiment which few customers probably feel at the moment. | The hoardings outside already proclaim "love your bank," a sentiment which few customers probably feel at the moment. |
"Trust" might perhaps be a more realistic target. | "Trust" might perhaps be a more realistic target. |
Inside a shiny new banking hall awaits its first account holders, complete with a giant Metro Bank logo. | Inside a shiny new banking hall awaits its first account holders, complete with a giant Metro Bank logo. |
Other possible new entrants, including French and Brazilian banks, have yet to declare their hands. | Other possible new entrants, including French and Brazilian banks, have yet to declare their hands. |
But MP Michael Fallon, a Conservative member of the Treasury Committee, is concerned that some of the new entrants may be specialist banks, catering only for the internet. | But MP Michael Fallon, a Conservative member of the Treasury Committee, is concerned that some of the new entrants may be specialist banks, catering only for the internet. |
He is also worried that the likes of Tesco or Marks and Spencer would be "more interested in promoting retail sales than providing the range of services you'd expect from a high street branch". | He is also worried that the likes of Tesco or Marks and Spencer would be "more interested in promoting retail sales than providing the range of services you'd expect from a high street branch". |
To the rescue | To the rescue |
So who will come to the rescue, and who might buy up to 1,000 High Street branches? | So who will come to the rescue, and who might buy up to 1,000 High Street branches? |
One obvious answer is Virgin Money, which tried to buy Northern Rock when it originally ran into trouble. | One obvious answer is Virgin Money, which tried to buy Northern Rock when it originally ran into trouble. |
But when asked about the number of High Street branches it might need, its chief executive was non-committal. | But when asked about the number of High Street branches it might need, its chief executive was non-committal. |
"I suspect initially we will start with a few branches," Jayne-Anne Gadhia told BBC News. | "I suspect initially we will start with a few branches," Jayne-Anne Gadhia told BBC News. |
"Over time though I would hope we will have hundreds of branches, rather than a handful of branches." | "Over time though I would hope we will have hundreds of branches, rather than a handful of branches." |
But as yet there is certainly no promise to buy any of the banks that are for sale. It will depend on the locations, and the price. | But as yet there is certainly no promise to buy any of the banks that are for sale. It will depend on the locations, and the price. |
Higher prices | Higher prices |
One other consequence of the government changes in banking is likely to be higher costs for account holders. | One other consequence of the government changes in banking is likely to be higher costs for account holders. |
Tougher regulation means banks have to communicate more thoroughly with their customers, as well as regulators. | Tougher regulation means banks have to communicate more thoroughly with their customers, as well as regulators. |
Banks also have to hold more substantial reserves, to ensure greater financial stability in the future. | Banks also have to hold more substantial reserves, to ensure greater financial stability in the future. |
Inevitably that means higher costs for banks. | Inevitably that means higher costs for banks. |
Ralph Silva, a banking analyst, believes customers will therefore have to pay up to 15% more for banking services. | Ralph Silva, a banking analyst, believes customers will therefore have to pay up to 15% more for banking services. |
"We're going to have to pay more for pretty much everything," he said. "Current accounts, credit cards, mortgages: the costs are going to be brought on us." | "We're going to have to pay more for pretty much everything," he said. "Current accounts, credit cards, mortgages: the costs are going to be brought on us." |
The Treasury says such costs are an inevitable part of securing the financial system. | The Treasury says such costs are an inevitable part of securing the financial system. |
And it is promising that selling off the 1,000 banks will lead to "significant" new competition in High Street banking. | And it is promising that selling off the 1,000 banks will lead to "significant" new competition in High Street banking. |
It now has four years to complete the sales, and to prove its point. | It now has four years to complete the sales, and to prove its point. |
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