Reform of the banking sector needs to focus on providing different models rather than moving around the pieces, according to Metrobank.
Giving evidence to the Treasury select committee as part of its inquiry into competition and choice in the banking sector this morning, Metrobank vice chairman Vernon Hill said choice in the market is more important than moving around the pieces.
He said: “My outside opinion is you are focusing too much on the parts here rather than choice. We would say look at differentiated models, if Santander gets part of the RBS group what have you really gotten but new signs?
“If you look at this like other businesses, the hotel sector is a good example. Everybody serves the hotel segment in a different way at different price points and customers have a real choice: whether they want a high price room or a low price room. Here you really have little choice.”
He was responding to a question from Labour MP George Mudie who asked if the major banks should be broken up to promote competition.
Hill said: “Generally I believe with larger retail banks, once the get past a certain point there is poorer service to the consumer.”
Earlier in the session he said that despite diversification, the US has a large number of banks competing against each other. He said there are now around 8,000 banks down from 24,000 when he went into the industry, with over 170 in New York alone.
He said: “You could say the Anglo-Saxon banking model has developed on two extremes, Britain has developed to have a low number of very large banks and America still has a large number of relatively small banks.
“Frankly my opinion of the idea that this is a competitive banking market, from my experience, I do not believe that to be true. It is about giving customers freedom of choice, all the major banks are essentially offering the same products in the same way.”