Britain's big banks could face break-up after a new competition watchdog said it plans to launch an 18-month competition investigation. Hayley Platt reports.
Lloyds Bank is one of the UK's biggest for both personal and small business banking. As such, it's thought to be most at risk of being broken up. Along with another state-backed giant, Royal Bank of Scotland, which also dominates the same market. That is, if an inquiry goes ahead to look at competition between Britain's high street lenders - including other heavyweights Barclays and HSBC. If the inquiry finds against them, they could be told to cut their market share, potentially by selling more branches. Mike Ingram is with BGC Partners. SOUNDBITE (English) MIKE INGRAM, MARKET ANALYST, BGC PARTNERS, SAYING: ''I think the question that has to be asked is: where is this leading? And just looking at the outline of the report, they, the CMA is basically suggesting that what we have here in the UK is an oligopoly, and it's sclerotic banking sector in terms of customer choice, and to some extent customer service, and this is not ultimately good for the UK economy.'' UK consumers have been moaning about high-street banks for years. Hefty charges, pensions mis-selling, and a sense that the personal touch has long gone from service, just some of the complaints. This potential inquiry is being mulled over by the UK's new watchdog, the Competitions and Markets Authority. Banks have put forward their own proposal to increase transparency - and make it easier to switch accounts from one bank. But those don't go far enough, says the CMA. Barriers to entry for new banks remain significant. And levels of switching are low - only around three per cent of personal customers change each year. SOUNDBITE (English) MIKE INGRAM, MARKET ANALYST, BGC PARTNERS, SAYING: ''The CMA report today suggest that there is a more immediate problem, that we can't really wait for challenger banks to erode the existing market share of the big four, because that's not really happening at the moment.'' Banks - and their customers - will have to wait a while for the results, though. It's thought the inquiry would last 18 months. A decision on whether the inquiry will go ahead isn't expected before the last quarter of this year.