Lloyds Banking withdraw more branches

The news that they should sell off more than the planned 600 of their branches was not received well by the Lloyds Banking Group. The Independent Commission on Banking, which is chaired by Sir john Vickers, have come back and told them that after their recent takeover of HBOS, the sell off they agreed with the European regulators is nowhere near enough. They could be forced to sell nearly 1000 branches to cut down on their market dominance.

This decision came as the ICB also proposed that banks should be ‘ring-fencing’ their retail arms away from their investment banking. The proposals, however, which herald the beginning of the biggest shake-up in banking for decades, brought about a furious response from Lloyds.

António Horta-Osório, the Chief Executive, said that this could well force the bank to delay the quick sale of the agreed 600 branches, and delay the arrival of any new competitor to the market. He added that they were shocked at the figures, and didn’t believe the decision was in the best interest of their customers.

The commission, however, found that by selling off just 600 branches, would severely hamper the efforts of any bank wishing to be a real competitor in the market. Lloyds currently has 2900 branches and a 30% share of the market in current accounts. Their shares rose by 0.2p to 62.36p, which is well behind the others in the same sector. Another of the ICB’s proposals was to merge some of the sold branches with the Northern Rock, thus creating new challenger bank.