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| kuacou... |
 Posted: Sat Nov 07, 2009 1:27 am |
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Changing face of high street banking
By Steve Lodge, Lucy Warwick-Ching, Jo Cumbo and Ellen Kelleher
Financial Times
Published: November 3 2009 13:07 | Last updated: November 6 2009 21:47
Royal Bank of Scotland (RBS) and Lloyds Banking Group have been given
four years to sell off some of their assets, to comply with European
rules on banks receiving state aid. FT Money examines what this will
mean for customers.
What are the banks selling?
Lloyds Banking Group has agreed to dispose of 600 branches and give up
a 4.6 per cent share of the UK current account market as well as 19
per cent of its group mortgage assets. It will do this by selling the
TSB brand, its Cheltenham & Gloucester (C&G) mortgage operation,
Lloyds TSB Scotland and a related banking licence, as well as its
Intelligent Finance internet business.
RBS is selling 318 branches, including its RBS branch-based business
in England and Wales and its NatWest branches in Scotland. It is also
selling its insurance brands: Churchill, Direct Line, Privilege and
Green Flag.
What will these sell-offs mean for cash savers?
Savers already benefit from a competitive market for new deposits,
experts say, but the sale of Lloyds' businesses such as C&G and
Intelligent Finance could intensify the battle.
David Black, banking consultant at Defaqto, the research firm, said
the proposed sell-offs should be good for savings competition if the
buyer is a new entrant that has to establish a track record of
offering attractive rates. But if a buyer is an established savings
provider, there could be less benefit.
However, existing customers should remain vigilant to any downgrading
of their rates, warn experts.
Sell-offs could also offer further protection of savers' cash in the
event of bank failure. Currently, savers are covered for £50,000 in
total across the old HBoS brands, and another £50,000 for funds held
with the previous Lloyds TSB brands. Where a provider is sold, it will
be covered separately, potentially offering savers an additional
£50,000 of protection.
Will Lloyds and RBS current accounts be affected?
Probably not. But the deposit rates the two banks offer are not as
good as those advertised by some of their high street rivals.
Alliance & Leicester pays 6 per cent on its Premier Direct account and
Abbey offers 6 per cent to clients who deposit a monthly sum of
£1,000. In comparison, RBS pays just 0.1 per cent on its current
account while Lloyds pays 2.5 per cent on deposits of £1,000 per
month.
Will the restructuring boost competition in mortgages?
Yes. The UK banking market has fewer brands than many countries and
choice has reduced in recent years.
Francis Ghiloni, commercial director at realpricecomparison.com, says:
"At the moment, Lloyds controls 30 per cent of the mortgage market but
it is not a very competitive player. At some point, lending will come
back and it is much better if this happens where there is a vibrant
number of players offering competitive products, rather than just
three or four giants."
Melanie Bien, director at Savills Private Finance, says: "The new
banks won't have the legacy issues, so will be able to offer better
pricing as they won't have to repair their balance sheets with massive
profit-making products".
Possible new entrants include Virgin Money and Tesco. Mortgage brokers
also suggest C&G's branch network could prove attractive to an
overseas bank looking to break into the UK.
What about my C&G mortgage?
Existing borrowers with a C&G mortgage will simply become customers of
another bank once this arm is sold. If you have a fixed- rate
mortgage, the new owner will not be able to change your terms and
conditions. But C&G has one of the lowest standard variable rates and
a new owner may be able to raise that.
RBS is selling off its insurance arm. How will that affect these
products?
RBS has about 17m insurance policies through its various brands.
Customers of Direct Line and Churchill will be affected as well as
those who bought insurance from Privilege and Green Flag. But
consumers will see little immediate impact as the bank has four years
to divest these.
http://www.ft.com/cms/s/2/572b9432-cb06-11de-97e0-00144feabdc0.html |
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| Tim... |
| Posted: Sat Nov 07, 2009 7:25 am |
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