Mark Hoban is Financial Secretary to the Treasury and MP for Farehham
Today’s announcement that Lloyds will sell over 600 branches to the Co-op is very welcome news. It will deliver a stronger, more competitive banking market – and it will be consumers and businesses that benefit.
This deal makes the Co-op a stronger competitor: it will gain 4.8 million customers, including 100,000 business accounts, it will have 6% of the market in personal current accounts and about 10% of the UK bank branch network. It is a significant step towards restoring proper competition to the banking sector.
I’ve worked with the FSA, the European Commission, the Co-op and Lloyds to facilitate this deal and it is one of a series of actions we have taken to open up a banking market that became less and less competitive whilst Labour were in office.
In 1997, there were ten major UK banks. After over a decade of consolidation, culminating in the Lloyds-HBOS deal, this left the high street with just five major players. That dominance currently means that the largest four banks in the UK account for 77 per cent of personal current accounts and 85 per cent of small and medium-sized business current accounts. That concentration is bad for retail customers and businesses. It meant there was less competition and less innovation.