A shake-up is possible—but only if customers shop around more
CONSUMER groups have long worried about a lack of competition in Britain’s personal-banking market. Waves of consolidation over the years have left it more concentrated than, for example, that of the United States. Consumers have remained highly reluctant to switch their current accounts (checking accounts, as Americans call them) because it can be so cumbersome, even though they have become quite used to shopping around for other utilities (see chart below). Forced mergers and takeovers during the financial crisis made things worse: the governor of the Bank of England, Mervyn King, has expressed worries that the resulting megabanks are too big to fail, and thus should be broken up.
Now, with some of the rescued banks’ branches being put up for sale, and several ambitious new entrants seeking to grab a significant share of the market, there is the chance of a better choice for bank customers. On April 6th bidding closed for 318 branches of the Royal Bank of Scotland (RBS)—in which the taxpayer now has an 84% stake—that are being sold on the orders of the European Commission, as a quid pro quo for its state rescue. Depending on who wins, the sale could be a first step on the road to ending the oligopoly enjoyed by Britain’s big four—RBS, HSBC, Barclays and Lloyds.
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