FTAdviser.com

The fallout of the credit crunch has created a potential flurry of new banks on the high street and the supermarket checkout.

Greed got the better for most banks who for many years took advantage of the massive cost income ratios available to them and now the new kids on the banking block are taking advantage.

It appears that the government is turning its back on the established part of the banking sector, which it courted for years, with Lord Myners of Truro, financial services secretary to the Treasury, courting a number of new kid banks to establish a high street presence.

The credit crunch and the multi-billion government bail out means that Northern Rock, the taxpayer owned bits of Bradford & Bingley and the forced sale of Lloyds Banking Group and Royal Bank of Scotland businesses means that there are plenty of opportunities for the new kids.

It is believed that there has not been a new major high street bank in the UK for around 100 years and it seems there are plenty of new kids who want to take advantage of the massive profits available in the sector.

Virgin recently got its banking license buying little known Church House. Metro Bank is waiting for its licence from the FSA and Walton & Co, a bank launched by Sandy Chen, former analyst at Panmure Gordon, has been tapping investors for funds.

Non traditional financial services companies like Tesco, Sainsbury and Marks & Spencer have all been rumoured they may go into retail banking.

Liz Hartley, consultant for Datamonitor’s Financial Services team, said that the new banks will bring a more dynamic aspect to financial services.

She said that Tesco Bank will take a 1.5 per cent share of the current account market as soon as 2013.

While Metro Bank will win 0.5 per cent market share in the UK current account market by 2015.

Clearly the banking sector is set for more changes to come.

This seems a poorly researched article. Is the author aware that Tesco, Sainsbury’s and M&S already are in Retail banking and have been for a number of years!

All of this should be good for the banking sector providing that these new banks learn from the mistakes of the big boys and offer a range of facilities and not just cherry picking.

Grocers will succeed at banking by being everything traditional banks should be…
See http://www.kamcity.com/kamblog/2010/01/gap-in-banking-category.htm

I think whoever the new banks are should start putting branches back into towns and villages. The loss of a town or village bank usually means the slow death of that location. This could revive a lot of the smaller towns and villages etc.