SANTANDER UK has rejected a suggestion by MPs that its purchase of 318 RBS branches last year was a “missed opportunity” to improve the competitiveness of high street banking in Britain.
“'The deal to buy the RBS branches was approved by the EU. Santander is a challenger bank in the UK, not an incumbent,” a spokesman for the bank told City A.M., objecting to the committee’s decision to group Santander UK with Britain’s biggest retail banks – Barclays, Lloyds, HSBC and RBS.
The bank was reacting to a report published at the weekend by the influential Treasury Select Committee, chaired by Tory Andrew Tyrie, which said that Santander “was already a leading player” in UK banking and that the government let its desire for a good return from the RBS sale trump its effect on competitiveness.
Santander is keen to stress its “challenger” status, adding that it is “providing a competitive alternative to the UK’s incumbent banks”, rather than contributing to concentration in the market.
Other large banks also dismissed the committee’s view. HSBC said: “The UK retail market is very competitive at the moment – it’s probably the most competitive in Europe.”
The Treasury Committee report said that some banks’ “too big to fail” status gives them an unfair advantage that contributes to an “oligopoly”, with “high barriers to exit”, or bankruptcy. It added that banks are not clear enough about current account fees and horde information such as access to the payments system.
Despite concern about concentration, however, the committee said the Lloyds-HBOS merger should not be reversed for fear of damaging government “credibility”.