How’s he going to manage this then?

Labour will set in train “a reckoning with Britain’s broken banking system” to ensure at least two new banks can flourish in Britain with a minimum 12% market share by the end of the next parliament, Ed Miliband will say on Friday.

How’s he going to ensure that they get 12% of the market?

Will people be forced to use them for example?

14 thoughts on “How’s he going to manage this then?”

  1. That was the part of the article that really bugged you? A (rare) specific target?

    What about his plan boiling down to asking the CMA for a cap on market share (so yes, you will be forcibly ‘liberated’ from your chosen bank). What about the central creditworthiness register, concentrating risk and pretending LIBOR never happened?

  2. In the greater scheme of things, why is 7 large banks (6% each of the market is hardly niche) so much better than 5? Both of these new banks will still be “too big to fail”.

    It it was 3 rather than 1, that is certainly an improvement – breaking up a monopoly. I can also see a market flexibility point in having 4 rather than 2 (although it is less academically obvious.) But this is just “banker bashing”.

    Although exactly where he thinks he will get the peeps who will be running these new banks other than from the existing banking industry is worrying.

  3. “How’s he going to ensure that they get 12% of the market?”

    Have them run entirely by drug addled preverts. The Co-op model but more of it.

  4. No, he won’t have to force people.

    The two new banks, called His and Hers will offer free banking when a new law forces all the others to charge. It will also offer incredibly cheap, no questions asked, loans to people who have no income.

    What can possibly go wrong?

  5. I have it.

    He will print money and give it to the new banks so they can compulsorily purchase big chunks of existing banks, acquiring the 12% in a single bound.

    Then some “drug-addled perverts” with zero experience running a bank (ex Co-op or Bankia people should do) will be hired to run them into the ground resulting in a bail-out with more printed money just after Miliband is evicted from office in 2020.

    He will of course then devote the rest of his political career to criticising successive governments for failing to reform banking.

  6. The new banks will get the accounts hosted in the branches they take on, and he will rely on the fact that most people can’t be bothered changing banks to do the rest.

    I noticed Richie applauding this bold idea.. as if it will make the slightest bit of sodding difference. If Milliborg wants to do something about the banks then he needs to do something about the fact that almost everyone in the country is beholden to them, directly or indirectly, for the roof over their heads.

  7. Firstly he will order each of the big banks to divest some branches to reduce its own market share, then he will lump these together in two groups. When each of the old banks increases market share he will compel it to sell more branches.
    Of course nothing could possibly go wrong with each new bank trying to integrate branches that use four different and mutually incompatible computer systems could it? How many hundreds of millions of pounds did Lloyds spend trying to make the project verde branches’ computers compatible with the Co-op’s before that fell over?
    It isn’t clear whether or he has noticed the new TSB or the plan to separate out some RBS branches under the “Williams & Glyns” brand: the Guardian clearly does not know that TSB exists.

  8. I can just see the bankers queuing round the block for advice from Ed. Please write our business plan for us, oh great sage! they cry with one voice.

    Actually, the banks are plagued with so many legacy issues (bad loans, too much real estate, crappy IT, etc) that in some respects the barriers to entry are NEGATIVE.

    So why aren’t new banks springing up? We’re too lazy to change. The fault lies not in our stars, but in ourselves, Horatio.

  9. So in 13 years Labour did what changes to banking? Now of course they have the answers to problems.
    My bank (Natwest) tried to transfer my business account to another owner – I would have had to switch banks, my local branch would have been a different bank while it would have had business and personal accounts in banks 4 miles apart.

  10. I thought it was generally recognised that the Parties of the Left… that would be all of them… are interested in initiatives not outcomes.

    The Coalition’s initiatives followed on seamlessly from Labour’s.

  11. It now appears the biggest hurdle to new entrants in the banking market is the government rather than regulations. Whatever market there was in banking has been replaced by arbitrary interference authorised by the court of public opinion.

  12. There is only one bank branch in the town square, there is insufficient consumer choice.

    There are four bank branches in the town square, this is wasteful duplication of resources.

    [Please select one]

  13. BIF: “Actually, the banks are plagued with so many legacy issues (bad loans, too much real estate, crappy IT, etc) that in some respects the barriers to entry are NEGATIVE.”

    Don’t think it makes barriers to entry negative, though. Just on the IT side: old systems may be buggy, but building a new one from scratch would not be an instant or cheap job. Hasn’t the plan always been for spin-off banks to inherit their “parent’s” systems, to get around this? Think Frances Coppola would have something more useful to say about than than me, as that is her patch.

  14. Given that bankers worldwide have got politicians worldwide by the balls, two extra “ball grabbers” won’t make much difference to the extent to which banks run rings round politicians. And for verification of that, see an article in today’s Financial Times which is reproduced on this Spanish site:

    http://hipona.blogspot.co.uk/2014/01/nothing-can-dent-divine-right-of-bankers.html

    Plus there’s an article by Robert Schiller (recent economics Nobel Laureate) saying much the same:

    http://www.project-syndicate.org/commentary/robert-j–shiller-asks-why-innovative-ideas-to-prevent-another-financial-crisis-have-gained-no-political-or-media-traction

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