Newspaper article The Evening Standard (London, England)

Time for Banks to Try a Happier Hunting Ground; City Comment

Newspaper article The Evening Standard (London, England)

Time for Banks to Try a Happier Hunting Ground; City Comment

Article excerpt


IT IS now common knowledge that Lloyds TSB made a serious attempt to merge with Deutsche Bank. Talks took place several months ago but came to nothing.

Deutsche was pushing for a dominant role and Lloyds was reluctant to concede, particularly since its stock market capitalisation is significantly larger than the German bank's.

A deal with Deutsche would have exposed Lloyds to all the problems of continental Europe's retail banking market - too many workers, not enough work and old-fashioned labour laws that make large-scale redundancies difficult and profitability elusive.

Lloyds has been trying to find a European partner for years but each attempt ends in failure.

There is a yawning cultural and linguistic gulf between the British and continental banking markets that UK clearers have found nigh on impossible to bridge.

Lloyds has been the most public about its European ambitions but that does not mean the others have not tried. So far, however, none has been successful.

Royal Bank of Scotland has its stake in Spanish bank Banco Santander Central Hispano but that relationship is unlikely to become any more intimate as the BSCH board is unwilling to relinquish its hold over the group. HSBC recently bought Credit Commercial de France but that focuses on corporate and wholesale banking, rather than the retail end of the market.

All four major clearers - Barclays, HSBC, Lloyds and RBS - have branches dotted through the European Union but their involvement is patchy and the result of a piecemeal organic approach.

Not one clearer has managed to cross the Channel successfully and find a partner, despite the continued belief that the cost savings would be substantial and the cross-selling opportunities vast Perhaps it is time to begin thinking laterally. Europe may have yielded little joy for the banks but the US is a different story. …

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