The Archbishop of Canterbury said it and was ignored, now Vince Cable’s “Enterpreneur in Residence” has repeated it. RBS and Lloyds are too big and have too dominant a share of the UK banking market to enable a healthy economy to grow: they should be broken up now.
Most of us had never heard of Lawrence Tomlinson until he produced his report on the alleged predatory behaviour of RBS’s Global Restructuring Group, but it repays careful reading. Quite apart from his findings on the appalling way the bank treated its small business customers, in plain words he puts forward a telling and hard-hitting assessment on the state of current banking with a radical solution:
“Ultimately, the best safeguard would be a more competitive banking market within which customers can vote with their feet. RBS and the Lloyds Group have around 60% of small and medium size business lending and similar control of retail banking which is not healthy for the UK. They are now bigger than ‘too big to fail’, are clearly too big to regulate and have become even more remote from their owners.
“There are strong arguments for splitting the Government backed banks into six solely retail and commercial banks from RBS and Lloyds, each with about 10% market share. The other parts of the banks should be sold, such as the equity and investment businesses, using the proceeds to recapitalise the retail and commercial banks to the latest, and future, Basel requirements.
There is nothing that will stop 2018 being the same as 2008 unless radical action is taken now.
“Returning RBS and Lloyds to full private sector ownership in their current form would be a return to the banking landscape of 2003, possibly with even less competition. Although there is now more regulation in place, we have seen before that regulation does not always prevent banks from acting inappropriately. Given the lack of any real change in the banking sector, there is nothing that will stop 2018 being the same as 2008 unless radical action is taken now.
“Most businesses need utilities like gas, water and electricity to operate. Proper finance and financial services are required by businesses as much as any other utility. Banking stocks should therefore become utility stocks, not racy stocks to gamble on. The returns should be a steady and sustainable yield, in the region of 6%. This would reverse the perverse culture which incentivises the banks to harm the financial position of a good business if doing so will help their commercial position.
“Instead banks would once again adopt a more traditional approach to lending in which the banks growth is in line with that of the business and customer, not at their expense.”
The is not much more I can add to that, other than to ask: does any political party have the courage to take on the banks and break them up?