United Kingdom

Details

  • Industry: Financial Services, Banking
  • Type: Press release
  • Date: 17/01/2014

Forcing rules on bank competition would be a mistake 

Responding to the Labour party’s plan to cap the market share of banks in a bid to increase competition, Bill Michael, EMA head of financial services at KPMG, commented:

 

“The theory of increased competition is compelling and obvious.  In theory, more banks will encourage greater innovation, improve customer service, lead to tighter pricing and reduce systemic risk. In reality, this is challenged by the global regulatory framework, the broader market and the state of the economy.

 

“The ultimate goal is to better serve customers but competition is very difficult to mandate.  You don’t get the best performance by telling the top athletes in the 100 metre sprint they can't run faster than ten seconds.  ‎It is counter-intuitive and these proposals may do more harm than good.

 

“If we have learned any lessons from the last five years, large, blunt, artificial and imposed separations of the sector have not delivered.

“Reducing banks’ scale will not result in enhanced price competition given the high capital and liquidity costs introduced to make the system safer. The other irony is that selling branches would move retail customers rather than the SME businesses, widely recognised as the bedrock of the economy. 

 

“Reducing the barriers to entry and creating an environment that encourages an open retail and SME market is the first step. However the ultimate ingredient is a growing balanced economy.  ‎ Without this, the market cannot breathe.”

 

-Ends-

 

Notes to editors:

 

 

For further information please contact

 

Monica Fiumara, Senior PR Manager, KPMG

Tel: +44 (0)20 7694 5674

Mobile: +44 (0)7901 105180

Email: monica.fiumara@kpmg.co.uk

KPMG Press Office: 020 7694 8773

 

About KPMG

 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

 

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