The Current Problem with UK Banking

The UK’s retail banking sector remains highly concentrated: as shown in the table below, the top 7 banks in the UK hold over 90% of deposits and loans.

This causes severe problems for the economy and all of us, including boom-bust cycles, crises, inequality and lack of local jobs. More specifically:
• In the event of another banking crisis, the taxpayer will once again have to cover the losses and liabilities of these ‘mega-banks’, as not to do so would risk an implosion of the UK economy. They remain ‘too big to fail’;
• The banks are too big to lend effectively to the UK’s small and medium size enterprises (SMEs), which are the feeder pool of the ‘productive economy’. They prefer to lend large sums to the ‘speculative economy’, which pushes up the price of property and other assets;
• Senior staff of the large banks continue to take inflated bonuses despite the rising number of complaints received by the Office of Fair Trading, and recent reputational scandals such as LIBOR rigging.