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The Actuary The magazine of the Institute & Faculty of Actuaries

Banking sector for sale?

The retail banking market in Britain is set for a big shake-up, according to Aon Consulting. This will be through a mixture of domestic consolidation and further takeovers by US and European banks.

‘Foreign banks are in an acquisitive mood and their attention is firmly on the UK’, explains Steve Holt of Aon. ‘Smaller banks are more vulnerable to takeover as these overseas players are anxious to avoid the attention of the Monopolies and Mergers Commission.’ Holt believes that there will be consolidation among Britain’s smaller banks and that once one merger happens it will trigger a domino effect across the industry.

‘The UK marketplace is overbanked’, continues Holt. ‘That means if there is not more consolidation in the sector then cost-cutting is the only alternative. There will still be a role for boutique banking for high-net-worth consumers, but the general trend is towards banking online or at the supermarket.’

Are the UK banks, many of which are also leading insurance players, set to follow the growing number of household names in other sectors which are moving into foreign ownership? Would this be good or bad news for UK consumers and corporates? The Actuary welcomes readers’ views.