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article imageBritish banks for sale in United Kingdom

By Maciej Lewandowski     Nov 11, 2009 in Business
As two of the largest British banking groups (Lloyds TSB and Royal Bank of Scotland) are about to sell hundreds of their branches, millions of UK customers will face years of uncertainty.
According to the BBC, branches for sale are: 185 Lloyds TSB branches in Scotland; four Scottish branches of Cheltenham and Gloucester; Intelligence Finance internet operation; Royal Bank of Scotland branches in England and Wales; NatWest branches in Scotland; and RBS Insurance.
The whole operation will take up to four years and there is still no formal buyer.
The restructuring plan was ordered to the banks by European Commission as a penalty for accepting state aid. It was also ordered to promote greater competition in the UK banking sector.
As the Independent notes:
British retail banking has consolidated into a handful of lenders whose anti-competitive practices have concerned customers and the Office of Fair Trading. In the 1990s, Cheltenham & Gloucester, TSB, Lloyds, Leeds Permanent, Halifax, Birmingham & Midshires and Bank of Scotland were rivals: now they are a single group.
These practises led to last year's financial crisis that forced the British government to spend taxpayer money on failing banks.
There are additional requirements for Lloyds and RBS, including limitations in bonuses for their staff (see: Bank branch sell-off for Scotland) and prohibition of encouraging their customers to stay with them after the restructuring.
However, customers will be allowed to stay with their old banks but will have to open a new account with an unsold branch (see: Lloyds Banking Group Announcement).
Both affected banking groups – Lloyds and RBS – posted announcements on restructuring plans, assuring customers that no immediate changes are expected, the services are to run as usual and the whole operation will be made in a way that minimizes disruption for customers.
Some newspapers and websites highlight potential inconveniences to customers associated with the operation.
The Independent notes that customers at the sold branches will have their accounts sold, like it or not. They will literally be forced to switch to a new bank.
Moreover, some of them will be branded as “bad bank clients,” because the Northern Rock will be divided into “good bank” and “bad bank."
And the big unanswered question remains: Who is going to buy the branches that are for sale?
The British government wants to create new high street banks. The Chancellor, Allstair Darling, quoted by the Independent, said, “This will increase diversity and competition in the banking sector, giving more choice and a better service.”
But theses plans are still unclear. As the FinancialAdvice.co.uk argues:
While the UK government's plans for the future seem perfectly acceptable on paper it will be very difficult creating three new banks which will offer a more personalised service to banking customers and also inject competition into the sector.
Other possible solutions are to sell branches to the existing banking groups: British or foreign. But there will be more expected problems, described in details by the Independent: Roll up, roll up, for the great bank sell-off .
Meanwhile Lloyds and RBS announced further job cuts, condemned by the unions as "corporate arrogance."
The whole restructuring procedure has been, and still is, the subject of a considerable criticism.
As the shadow chancellor George Osborne, quoted by Politics.co.uk , argues:
With RBS, it breaks a new world record for the biggest bailout of any single bank in any country. In return for this huge slug of money, there is still no guarantee that it will get lending flowing in the real economy, or help real businesses stay afloat or keep people in work.
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