Wednesday, 4 November 2009

"Selling off the bank branches"

Any clues as to what this diktat from the EU (strangely unchallenged so far by the likes of UKIP) is supposed to mean in practice?

Look at your average "bank branch". It consists of a) some premises which are effectively a retail outlet, rather like M&S or Vodafone; b) some local employees manning the above; and c) a bunch of customers' accounts which have been grouped together, largely for historical reasons to do with obsolete technology relating to cheque clearing, under an identification code known, amusingly archaically, as a 'sort code'. All these branches use exactly the same centralised computer systems, distributed networks, and front-of-house presentation and product range. So what, exactly, will be up for sale?

Well, it could be the the premises - but where I live in Reading, empty retail sites are currently as cheap and available as oven chips, so not much of a deal there. The staff? Nah. So that leaves the business - the customers. But hang on. Does the EU really believe that these are also an "asset" which can in some way be sold off willy-nilly to Virgin or Tesco along with the bricks and mortar?

Given that I will under no circumstances accept the enforced transferal of my banking business away from my current preferred supplier to the likes of Tesco, I would presumably have to go to Newbury or Glasgow or somewhere if I wanted to chat face-to-face with my bank. Meanwhile, a new customer in Reading will have, at best, the same number of local choices of bank as he does now, just different ones. How exactly does this increase competition?

Finally, coming at the question from a slightly different though intrinsically related angle, I've heard a lot of talk about the need to break up certain banks because they're "too big to be allowed to fail". Personally, I'm very pleased that my bank was too big to be allowed to fail - I'd have lost a lot of money otherwise.

1 comment:

  1. Perhaps it's the badwill related to the £2.2 billion Quarter 3 loss made by RBS that they are going to sell? Presumably that makes it about £8.8 billion loss for the year give or take. That must be worth something, might be worth putting in a bid. But then I know nothing - I have no economics degree.
    On the subject of bonuses, RBS chied executive Mr Hester said everyone at the bank was treading a "very delicate tightrope".
    What am I bid for this pair of wirecutters?