Friday, 21 October 2011

Is Verde just a game of 'Call my bluff'?


As the date for bids for Lloyds Banking Group's Verde continues to be extended and still there is only one bid on the table - a question that springs to mind is whether a very smart game of the TV panel show 'Call my Bluff' is being played by Antonio Horta-Osorio, the CEO of Lloyds Banking Group.

There is only one bid on the table at the moment and that is from Lord Levene's NBNK. The price being offered is considerably below what the government and Lloyds Banking Group shareholders were wanting or expecting. NBNK has also been allowed (the NBNK CEO, Gary Hoffman, was prevented from bidding for Northern Rock for twelve months after he'd left his post as its CEO) into the bidding for Northern Rock early. A move on the part of Northern Rock probably to create more competition and, hopefully, push up the price for the Newcastle-based bank. From an NBNK perspective combining both the Northern Rock business with the Verde business would ease some of the working capital concerns about acquiring Verde, since Northern Rock is deposit heavy and loans light, whereas Verde is the other way round, and it would provide NBNK with a platform to migrate Verde onto. It would also make NBNK even more of a competitor to the established banks with over 400 branches. However it would require NBNK to raise even more capital from its investors, complicates the acquisition very significantly and increases the complexity of the integration execution. Even if NBNK were to acquire Northern Rock the price being offered to Lloyds Banking Group or Verde may not be sufficient for shareholders.

This leaves the other contenders for Verde that have not put in a bid yet. Hugh Osmond, the pizza restaurants to pubs operators entrepreneur best known for Pizza Express and for paying over the odds for the Pearl Insurance business, and his Sun Capital Partners business are allegedly looking at ways to re-shape the Verde deal so that it is less capital intensive. This could mean that the pace at which the Verde accounts are transferred to the acquirer is slowed down or indeed reduced so that the funding gap is not so great. The challenge for any bid from Sun Capital Partners will be whether it is seen as enough of a 'strong challenger bank' to meet the ICB requirements for whoever acquires Verde.

The third contender is the Co-operative. With no shareholders to call upon for capital, the Co-Op would have to go to the markets to raise the capital, which is even more challenging for a mutual than a equity-based company. With liquidity in the markets extraordinarily difficult it is no suprise that there has been no bid from the Co-Op yet.

With question marks over all three contenders the final option that Antonio Horta-Osorio has is to float Verde, which has been suggested/threatened before. But how realistic is that given the markets going cold on investing in banks and capital being hard to raise. If the float could be got away would it be at an acceptable price?

Lloyds Banking Group has until 2013 to dispose of Verde, but Antonio Horta-Osorio has said that he wants clarity by the end of this year. Is this in anyone's best interests given the state of the prices for banks. Or is this all part of the elaborate game of 'Call my bluff' where having gone through both the sales and the flotation process Antonio Horta-Osorio can turn to the regulators and say that he has tried to do everything possible to meet their requirements to dispose of Verde, but there were no viable buyers, so can't I just keep them?

Update: The game has got even more interesting with Antonio going off on sick leave for the rest of the year. Now where does that leave Verde in the meantime, with an acting CEO with no vested interest in the long term future of Lloyds Banking Group?


Friday, 14 October 2011

HSBC goes back to its roots

HSBC announced its return to its roots as a bank that supports international trade in the strategy announcement on May 11th. Stuart Gulliver, the new CEO and former investment banker, has firmly changed the emphasis back to becoming 'the leading international bank concentrating on Commercial and Wholesale banking in globally connected markets'.



Stuart Gulliver

Whilst the words may be modern, this is what the bank was first set up for in Hong Kong in 1865. Supporting international trade alongside the Taipan at Jardines. 'globally connected markets' are the twenty first century words for what is essentially trade routes, though expanded beyond commodities and goods to include money. So when you look at the US and Mexico or Germany and Turkey, as well as the large amount of trade flowing, you see large quantities of money flowing across borders sent by entrepreneurial immigrants back to their families, the strategic value of being in these geographies makes abundant sense.

'Becoming the world's leading international private bank' is also a return to the original roots. Support the international trading companies and support their owners - again what the original HSBC was set up to do for the taipans living on The Peak. In addition with the focus on Wealth Management HSBC is ensuring that as the entrepreneurs acquire their wealth there is a route to climb up to the exclusivity of the Private Bank.

The real change of focus is on 'limiting retail banking to those markets where we can achieve profitable scale', but who can argue with the cold logic of that? What it does mean is that questions are undoubtedly being asked as to whether the use of the strapline that has been so successful and has won so many awards, 'The World's local bank',  will still be valid, unless of course your definition of 'the world' is restricted to the number of focus countries, considerably less than the 80+ countries that HSBC currently operates in.
With the announcement of the sale of its Hungarian retail banking operations to Cofidis Magyarorszagi Fioktelepe, the sale to Itau (the Brazilian bank) of its Chilean retail operation and discussions underway for the sale of its small (11 branch) South Korean retail bank, the strategy of withdrawal is in full execution.

However it is not all about withdrawal. In Australia HSBC has opened its 31st retail branch as it builds its presence there. Whilst there is an increasingly large and affluent Asian population which HSBC will be attractive to it is difficult to understand how this fits in with HSBC's strategy to focus on markets where it can grow a significant presence given the dominance of the 'Four Pillars' - Nab, CBA, ANZ and Westpac in Australia. 

HSBC has clearly made some diversions from its original path along the 146 years that it has been running, not least of all the move into the subprime market with the acquisition of Household in the US (the remains of which is now subject to review and may results in the selling of all or part of the cards and retail banking businesses), but it is to be welcomed the statement of intent to move to a 21st century version of what it was originally set up for.


Monday, 10 October 2011

A new type of CIO is required for today's banks

Traditionally CIOs in the banks have come from one of two backgrounds with a third one emerging.
Firstly there are those who started out as system programmers or maybe COBOL programmers who have risen through the key roles such as either Service Delivery Manager or Development Manager to finally make it to CIO. Their experience has been garnered from working for many years for one or more banks. They will have learnt about how old, fragmented and undocumented the systems are and will have had it hammered home to them how absolutely critical it is that the systems are up, available and working for customers. During their careers they may well have seen colleagues losing their jobs due to a system outage such as the ATM network crashing or systems in branches not being available. They see their role as defending the systems from change. As a consequence  and with the fragility of the systems in mind any changes required to the systems from the business are robustly challenged and when agreed to are implemented with great caution. These CIOs pride themselves on systems availability and cost reduction through minimising change. CIOs with this background can be described as ‘Technocrats
The second type of CIO is those who have come into their role by knowing how to work the system, how to manage the politics both within the IT function and with the business. Typically they may have come into the role from a non-traditional IT role such as IT Audit, Risk Management, strategy consultant, management consultant or even from an operational role within the bank. Whilst they do not have an in-depth knowledge of IT built from the experience of carrying out IT roles they are excellent at managing the relationships and politics of the banks. Like the ‘Technocrats’ they will typically be risk averse and a defender of the status quo. They can best described as ‘Bureaucrats’.
A new and emerging third category of CIOs come from one of the Indian  IT off-shoring companies. They will have been hired by the bank because of  the admiration that is held for the way that the Indian off-shore companies deliver software and services. With their adherence to CMMI and ITIL standards way above the level of most Western IT shops they are seen by many Bank Executives as the new way of delivering IT. They understand how to get the best out of the offshore suppliers and how to shake up and transform the internal IT functions. Their focus is on quality delivery of what they have been asked to deliver and no more than what they have been asked to deliver. Generally speaking they have little interest in the business – they might as well be delivering IT for a washing-up liquid manufacturer as a bank. They  see time spent on building positive, constructive relationships with the business as non-productive.  What they will do is take what the business asks for and deliver it – precisely. For those types of CIOs there is no need for business relationship managers but rather order takers and change managers. Their total focus is on delivering change using industry standards and to a high quality.  For them there is only one way to deliver IT and that is their way. They can best be described as ‘Delivery Ayatollahs’.
Whilst each of these three models of CIO have their role to play, a new type of CIO is needed for the banks. The reality is that there is far more significant changes in the banking industry than there has ever been before and the banks need to be able to respond to this. Never have the banks been under more scrutiny from governments, the regulators, businesses and the consumer.  Never has competition been so fierce and not just from traditional players. No longer can the banks be complacent about their customers when the fundamental basis for competition has shifted away from product pricing to the quality of the customer experience that is delivered and when the expectation of the customers has been raised so high by other players in the market such as Google, eBay, Apple and Amazon. No longer is it acceptable for a CIO to be simply focussed on the length of the batch window but now the businesses are looking to IT to help them work out the role of the bank in the online, real time, digital world. No longer can the CIO measure his or her success in terms of the size of their IT department when so much of it is delivered in an outsourced manner. These changes require that the CIO for the new banking world has to demonstrate a  number of characteristics.
Firstly they have be the CEO of an organisation delivering IT services to enable the business to serve its customers . As such they need to understand the impact they have on the bottom line of the bank of delivering those services, not how much it costs to run the datacentre, not how much it costs to operate the network, but the cost and revenue from processing a mortgage application and for producing a digital statement.  They need to manage the P&L for IT, much as their peers in marketing, operations, channels and products do for their businesses.
They also need to excel at supplier management. Since so many of the services that they ultimately are responsible for delivering to the business will be delivered by third parties both on-shore and off-shore then they need deep experience of sourcing, negotiating and delivering outsourced services. They have to be commercially very astute at understanding how to structure an arrangement that gets the maximum out of a third-party in the long term, which doesn’t mean just squeezing the supplier so hard that the deal hurts.
They need excellent relationship skills with their customers, the business. They need to be as passionate about the business results of the bank as their internal customers with the added expertise of understanding how these can be enabled through the smart use of technology. The CIO needs to be able to persuade, coach and lead the business – operate as a peer of each of the business heads.
They need to be as up to speed with the innovations in the banking and other industries as they do of what the latest technologies can do for the business. They need to be able to bring new ideas to the business in a way that the business can understand.
With all the regulations that are constantly changing and evolving the bank CIO needs to understand the implications of these on both the technology and the customer experience and be constantly looking at ways that the regulations can provide competitive advantage rather than holding the business back.
In short the new type of CIO that is required for the banks is the ‘Renaissance CIO’.  Just as with the Renaissance the new CIO has to be multi-dimensional, not just service-delivery, development, relationship focussed but all of those plus more.
Banks are beginning to seek out the Renaissance CIO – the introduction of Shaygan Kheradpir as the Global COO of Barclays Retail and Business Banking and the changes he has made is a step in the right direction (see http://www.itsafinancialworld.net/2011/05/barclays-cooscios-joined-at-hip.html ). However banks across the globe should question that given the ever increasing dependence on IT to deliver their services to their customers do they have the right type of CIO to lead their business forward?

Tuesday, 4 October 2011

NAB to exit UK?

All the signs have been there for some time. Cameron Clyne, CEO of NAB, talking of NAB Europe dragging down the results of the Group, Lynne Peacock, CEO of Europe deciding to 'retire' just as NAB were claiming to be interested in the Lloyds Banking Group branches. Lynne Peacock, the CEO who had tirelessly changed the image of both Yorkshire Bank and Clydesdale Bank, built a real contender for the SME banking market with some really innovative approaches would hardly 'retire' if NAB was committed to take on the Lloyds Banking Group 632 branches, Intelligent Finance and Cheltenham & Gloucester would she? So NAB expressed an interest in the Lloyds Banking Group branches - wouldn't any self-respecting competitor like to have a look under the covers if they had a chance?

Looking at the situation from Melbourne, the logic about exiting the UK is clear for all to see. As the UK Government goes out of its way to make it more expensive and less profitable to operate as a retail bank, with the situation only deteriorating with the publication of the Independent Commission on Banking (ICB) recommendations, banks across Europe seeing their valuations plummet and the Euro environment only getting worse, when a well-funded organisation comes along and asks to buy your business, you'd have to be mad not to consider it, take the money and run back to Australia.

So if the logic is there for NAB is it there for NBNK? Certainly on paper there is sense to it. Acquiring the NAB businesses would give NBNK the advantage of no longer being seen as a new entrant which should reduce both the cost of capital and the amount that has to be retained. The acquisition of NAB should also reduce the funding gap (estimated to be £30bn) between the loans being sold and the deposits/current account balances. It would also give NBNK a set of infrastructure and platforms to migrate the Lloyds Banking branches and brands onto as well as giving it an additional 340 branches. It would also give NBNK an established FSA- approved team (though that could also be bought from Lloyds Banking Group).

Where the concern should be for investors in NBNK is the execution risk. The separation of the disposal from Lloyds Banking Group is undoubtedly one of the most, if not the most, complicated de-mergers to execute on in Europe. Separating it and leaving it still running on a copy of the Lloyds systems and infrastructure is difficult enough, merging it into the NAB infrastructure adds even greater complexity. That assumes that the NAB infrastructure is worth merging into given that NAB Europe has been starved of investment for many, many years. The increase in deal risk by bringing NAB into the mix for NBNK can't be underestimated, however it can be done, it is just a question of whether it should be. The emerging story of the largest de-merger in UK banking continues.

Update 04/10. Despite having suspended the NBNK shares while conversations were underway, the deal has fallen apart. The NAB Finance Director made it clear that with bank shares prices at the bottom and with uncertainty around regulation it would be a disservice to shareholders to sell the UK operation at this time. He reiterated the NAB strategy for the UK being that of organic growth. The cynics could have interpreted this as trying to negotiate the deal price up, however that doesn't appear to be the case, which leaves NBNK asking the question is NBNK on its own going to be sufficient to meet the requirements of the ICB that Lloyds Banking Group sell to a 'significant contender'? See  http://www.itsafinancialworld.net/2011/09/is-nbnk-alone-going-to-be-enough-for.html

Thursday, 29 September 2011

Resignation of Deanna Oppenheimer - the end of an era for branch banking?



The announcement of the resignation of Deanna Oppenheimer as Head of UK & European Retail Banking at Barclays marks the end of an era for branch banking much as the end of shoulder pads marked the end of the Thatcher era.

Deanna Oppenheimer, ably supported by her husband, John, with his background in hospitality, fundamentally changed the world's view of what a bank branch should look like. It was Washington Mutual where the first bank branches with coffee shops inside (Starbuck's) and play areas for children were seen. It was these branches where the screens came down, the decor brightened, the lighting changed and the desks went from rectangular to free form.  It was at Wamu where branches became 'stores' and the experience of visiting the bank became pleasurable rather than a chore. Wamu became unique for a bank in winning retailing awards. In 2003 US Banker recognised Deanna as one of the top 5 most powerful women in banking. Many banks tried to copy the Wamu 'Occasio' concept design, including Abbey National (prior to being taken over by Santander) with its Costa Coffee tie-up, but none managed to match it.

Deanna was hired by Barclays to re-create that Wamu effect with the UK retail bank and has, to a very large extent, achieved that. However the bank customer has moved on from that and so Deanna bowing out now makes a lot of sense.

The era is coming to an end because customers have changed what it is they want from a bank. Almost since banking was invented the branch has been the most powerful channel for banking. This is where the investment funds have been focussed on. Where the money was came the power. Whoever was in charge of the branches was the most powerful person in the retail bank. However with a decline in the use of the branches, whatever Metro Bank might say, the power and the investment is moving away from the banch network and the branch-focussed directors and mangers are losing their influence and ability to drive the direction of retail banking. No longer does it make sense to invest millions of pounds and dollars in having the smartest and coolest branches - often a case of style over substance. There is a recognition now that the investment needs to be in the substance - providing a far better customer experience whether it is digital, contact centre or face-to-face, and recognising that increasingly the physical experience is far less important than it used to be.

Deanna Oppenheimer is just the last of the branch-centric powerful  female retail bankers to leave the UK industry. Over the last year the UK retail banking industry has seen Helen Weir (Lloyds Banking Group), Lynne Peacock (National Australia and formerly The Woolwich) and Joy Griffiths (Lloyds Banking Group, Wells Fargo and Westpac) all depart.  On top of this, with the sad premature death of  Terri Diall, formerly head of the Retail Bank at  Wells Fargo, Lloyds TSB (where she changed 'branches' to 'stores') and subsequently Citibank, it really is the end of that era.

Emerging to replace these phenomenal women are a cadre of women, and men, who really understand what it is to serve customers digitally. They will become the Deanna Oppenheimers of the digital banking world.

Monday, 26 September 2011

Is NBNK alone going to be enough for ICB?

When the Independent Commssion on Banking (ICB) Report was published earlier in September very little detail was given as to their recommendations for creating more competition in retail banking, however they did specifcially refer to the Lloyds Banking Group Verde deal (selling the 632 branches including the Lloyds TSB Scotland branches, Intelligent Finance and Cheltenham & Gloucester) and said that  'The Commission therefore recommends that the Government seek agreement with Lloyds to ensure that the divestiture leads to the emergence of a strong challenger bank.' The Commission stated that it felt that the 4.6% share of the personal current account market along with the funding challenges of the existing deal  was insuifficient to meet this criteria abd that the deal needed to change, but did not prescribe how.

When NBNK announced that they were in discussions with National Australia about buying their UK operations a solution appeared to be emerging, however following comments from NAB to the effect of why would they sell their assets as the bottom of the market, it looks increasingly likely that this opportunity to increase the share of personal current accounts and the easing of the funding requirements (by virtue of the NAB UK deposit base) has gone away.

Whilst NBNK argues that they have improved the attractiveness of their proposition by including a major IT organisation in their syndicate, it would be extraordinary if this was seen to compensate for the loss of an existing bank to their offer.

Certainly any new entrant to the retail banking market would not wish to inherit the legacy Lloyds Banking Group systems for any length of time, since they have been built over twenty to thrity years and as the often quoted Irish joke goes 'you wouldn't want to start from here'. Any new entrant in order to be competitive would be wise not to own all the infrastructure and IT applications but rather buy services from an  organisation who's core business is IT and who can manage the peaks and troughs of demand whilst ensuring the lights are kept on.

However this does not address the demands of the Independent Commission on Banking on whoever acquires Verde. Indeed this leaves the ICB's preferred option being the flotation of Verde with a different mix of current accounts and deposits. See http://www.itsafinancialworld.net/2011/06/flotation-most-likely-outcome-for.html

The question that should be generated in the minds of the general public and the Government, as shareholders in Lloyds Banking Group,  by the NAB decision to withdraw from disucssions with NBNK is whether the haste with which Verde is being pushed through is in the best interests of either the shareholders or consumers. Selling a bank at a time when bank prices are at an all time low and encumbering a new entrant with excessive debts may not be in anyone's best interests.

Thursday, 15 September 2011

Lloyds Banking Group celebrated September 11th

No Lloyds Banking Group hasn't gone to the dark side, despite what many people think about the banks. It isn't the destruction of two towers that the bank celebrated on September 11th, but the bringing together of two giants - Lloyds TSB and HBoS. For September 11th marked the formal end of the integration of the two banks three months early, below the original cost and with higher synergies achieved. However Mark Fisher, Director of Group Operations, didn't make the George W. Bush mistake of saying 'Job Done' on September 11th, even though he and his team are entitled to receive significant bonuses for delivering Integration early, as he knows that there is still Simplification (the delayering, streamlining and further platform consolidation of Lloyds Banking Group) and Verde (the separation of the 632 branches, Intelligent Finance and Cheltenham & Gloucester from the mother ship and transfer to the acquirer or floatation) still to do. However Integration is something to celebrate.

The integration of  Lloyds TSB and HBOS was the largest  banking integration in Europe. To have achieved it ahead of time, under budget and having over-delivered on the synergies is no mean feat. To give an idea of the magnitude of the task this involved bringing three brands Lloyds TSB, Halifax and Bank of Scotland (and you could argue Lloyds Bank Scotland) onto a single set of IT platforms, moving 8000 ATMs and 3200 branches onto a single coherent set of systems. Training all the staff to use these systems and new processes and to do this without interrupting service to customers represents an enormous success. When it is considered that during the period of integration Commonwealth Bank (a much smaller bank) has not still not managed to fully move onto a new banking platform nor has Nationwide Building Society, though both have been trying, gives the magnitude of the achievement some context.

This massively complex programme has been achieved at significant cost to the staff of Lloyds Banking Group, not only in terms of the long hours and weekends spent (for the window for testing much of this in the live environment is only when the banks are closed) by hundereds of staff, but also the numbers of staff who have lost or will lose their jobs as a result of the integration. However the number of staff put out of work would have been far greater if HBoS had been allowed to fail.

So should Lloyds Bankig Group  have been allowed to celebrate September 11th? Absolutely!

Footnote: Some of the gloss was taken off when some Halifax and Bank of Scotland online customers could not see the full details of their accounts following the September 11th weekend, but in the grand scheme of things this was a minor hiccup.

Monday, 5 September 2011

Should basic bank accounts be subsidised?

Nationwide, the UK's largest building society, has entered the fray about the recent announcement by RBS that basic bank account holders will only be able to use RBS ATMs. See http://www.itsafinancialworld.net/2011/08/one-more-step-towards-end-of-free.html  RBS followed Lloyds Banking Group who made a similar move for their basic account holders. Mark Renison, the Group Finance Director has said that  the company was “very concerned” by the move which will create an “unsustainable position” for cash-machine users.

Citizens Advice Scotland CEO has also commented  “This is an extremely worrying development. Basic bank accounts are used by people who have difficulty managing their money. That’s the whole point of these accounts. It is still only three years since the banks were bailed out of their own self-inflicted mess by taxpayers’ money."

The concern is that some people with basic bank accounts will have to travel some distance to find an ATM that is operated by their bank. This is, of course true, particularly those living in more rural areas. What this does bring once more into focus is the role that the banks play in society. Are they commercial organisations or are they part of the social services fabric of this country?

With all the furore following the financial crisis there is both a call for the banks to be standalone profitable businesses with no call on government funding and to have greater clarity over the fees they charge for providing services, but also to be part of the social system subsidising the low-paid and providing bank services in unprofitable rural and urban areas. Clearly these two requirements are not fully compatible.

This then leads to the vocal extreme to call for all banks to be nationalised or mutualised, which of course makes no sense, but as the Independent Commission on Banking puts the final touches to the report coming out on September 12th 2011, it would be hoped that amongst the 350 plus pages they go some way to addressing what the role of retail banks should be in the future and how this is compatible with being commerciallly attractive businesses.

Monday, 22 August 2011

Capital proposal doesn't go far enough to make LBG disposal attractive

Whilst the discussions that Lloyds Banking Group are having with the Regulator, if successful, about easing the capital burden for whoever acquires the 632 branches it is disposing of would help they still don't go far enough to make this an attractive deal for shareholders nor give the purchaser the chance to be a real contender in the short term. The argument that Lloyds Banking Group is putting to the regulator is that because whoever acquires the business will get a senior and experienced banking team the risk should be lower and therefore the need to hold more capital than existing banks should not be necessary. Whilst this might reduce the amount of core capital the new bank would need to hold by around £1.5bn this is a mere drop in the ocean in comparison to the £25-30bn bridging loan that the buyer will need due to fund the gap between the deposits and the loans that the buyer will acquire.

The impact of having such a mismatch between the loans and the deposits is that the increased cost base to service the bridging loan will put the new bank at a significant disadvantage to the incumbants, so the aim of creating a new challenger to the Big 5 banks may well not be achieved.

To overcome some of this challenge Lloyds Banking Group could look at persuading the EU that either the timescales of the transfer of the loans be extended so that initially there is more balance between loans and deposits and also a slower ramp up of the need for wholesale funding, which could result in the cost of that funding being lower, or argue that in the interests of making the new bank more competitive less loans should be transferred. The danger with making these proposals to the EU could be that it would backfire on Lloyds Banking Group and the EU could insist that more deposits are transferred to the purchaser to significantly reduce their funding needs; something  Lloyds Banking Group would not want to do.

In terms of shareholders, given how low bank valuations currently are, given the funding issues and the lack of serious competition to buy the branches rushing through the sale at this time will not result in the best price being paid and in the long term does not represent good value.

Thursday, 18 August 2011

One more step towards the end of "free banking"

The announcement by state-owned RBS (Royal Bank of Scotland) that it would join minority state-owned Lloyds Banking Group in restricting the access of its basic bank account customers to only its own ATMs is yet one more step on the road to the end of so-called "free banking" in the UK.

Basic bank accounts are, as the name implies, a checking account where no overdraft is allowed and only a debit card can be used. They were introduced as part of a government initiative to reduce the number of unbanked and all the major banks were leant on to provide them as part of their contribution to society. Without access to more profitable products such as loans and overdrafts and amongst the high users of branches for transactions (attracting further costs for the banks) these are unprofitable accounts for the banks to run and have little potential to move towards profitability. In a pure commercial world these are the types of customers that banks would encourage to join other banks. It is therefore no surprise that neither RBS or Lloyds Banking Group would not want to incur interchange fees for these customers using non-RBS or Lloyds Banking ATMs, particularly as they are not able to pass those costs on to their customers.

With the increasing clamour for more transparency around bank charges it is almost inevitable that the concept of so-called 'free banking' will end and it will be the less well off, such as basic bank account customers, who are currently subsidised by those who hold large balances in their current accounts, will be disproportionately impacted by the introduction of fees.

As the Independent Commission on Banking finishes off its report they need to be aware of the implications of getting what they are asking for, particularly on the least well off.