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The Big Four

The Council of Mortgage Lenders revealed the ‘Big Four’ 2008 UK mortgage lenders last week of Lloyds Banking Group, Santander, Nationwide and Barclays.

But while these remain almost unchanged from the CML’s 2007 premier league, the credit crunch has effectively created an elite group similar to that of the Premier League’s ‘Big Four’ – will they remain unchanged for years to come like Manchester United et al., or will something break up the leading pack?

The CML table of UK mortgage lenders revealed that Lloyds ran away with the title and took 30.3 per cent of the gross lending market, worth £78bn. Santander took 13.7 per cent of the market worth £35.2bn. Nationwide came in at respectable third, with an 11.2 per cent share of the market worth £29bn. Barclays took 4th spot with a 7.3 per cent share of the market, worth £22.9bn.

The Manchester United, Liverpool, Chelsea and Arsenal of the mortgage world seem unmovable.

And that surprised few in the industry – the credit crunch has led to essentially a few active lenders, the Big Four alongside RBS and HSBC – while 24 other players have to look on as the rich get richer and the industry gets less competitive.

But the top could all change – yesterday both Lloyds Banking Group and RBS had their debt downgraded by Fitch as strict capital and competitive restrictions from the EU Commission begin to look more likely.

This is the first sign that the market thinks Brussels will have a tight, iron grip on any financial institution that took state aid. This may mean that recent threats of EU Competition Commissioner Nellie Kroes that RBS and Lloyds may be broken up could soon be a reality.

The most telling evidence of this possible future came this week when Lloyds revealed that it would not be closing down its Cheltenham & Gloucester branches, without explanation. While some reports have suggested this as an example of poor management, others suggest that this is a pre-emptive move from the lender, which is taking Nellie’s threats very seriously – Lloyds may be delaying chopping off arms until it finds out whether it will become a victim of the EU regulatory guillotine.

Of course, if Lloyds and RBS are broken up this could throw the market wide open. It may open up spaces for some of the other successful building societies or even invite in some foreign investment from China or the Middle East.

So it may not be a Manchester City or Tottenham that breaks the top four, but rather a sharp axe, delivered from the other side of the Channel.

What do you think? Will the big boys topple in 2009? Or will they continue to dominate for the foreseeable future?

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