Direct Line and Intelligent Finance on the block in UK banking shake-up
03 November 2009 | 11895 views | 0
The shake-up in UK financial services resulting from the state-backed bail out of Royal Bank of Scotland and Lloyds Banking Group will see the sale of telephone insurance operation Direct Line and Internet bank Intelligent Finance and a wholesale restructuring of the UK's branch banking network.
Negotiations between the distressed high street banks, the UK Government and the European Commission have culminated in a programme of forced disposals designed to inject fresh competition into the UK banking market.
Under the conditions outlined by the authorities, Royal Bank of Scotland will be forced to dispose of its insurance operations and resurrect its old Williams & Glyn brand to house 312 business banking branches, including all RBS branches south of Scotland and the NatWest outlets north of the border. The bank must also sell off its Global Merchant Services unit, which handles over five billion card transactions a year.
Lloyds Banking Group has been instructed to offload former high street acquisitions Cheltenham & Gloucester and TSB, and the Intelligent Finance internet bank inherited from HBOS.
The UK Government says it will not allow the disposed businesses to be hoovered up by the counry's bigger banks, but instead wants to offload the restructured businesses to smaller competitors and new entrants.
News of the restructuring programme came as Royal Bank of Scotland announced plans to axe 3700 front line branch staff in a bid to cut costs. The cuts will remove a 14% chunk of the bank's staff wage bill and hit a third of its branch banking staff.