Still Banking on Bricks and Mortar in the Internet Age; ANALYSIS
Byline: ALEX BRUMMER
CHANCELLOR Gordon Brown's last act before he headed off on honeymoon was to sound the starting gun on a new wave of high street financial mergers.
By rejecting the advice of market expert Donald Cruickshank - who recommended that all bank mergers go directly to the Competition Commission - he signalled the Government's willingness to allow further concentration in the financial services.
Shares of the mortgage banks began rising from the moment Brown's rules were issued last Friday.
The critical response from consumers groups to the decision by Barclays to seek a [pounds sterling]5.5billion deal with the Woolwich will not be unexpected.
Barclays and its high-profile chief executive Matt Barrett have not been seen as the customer's friend as a result of branch closures and the attempt to impose charges on clients of other banks using its cashpoint machines - a policy now abandoned.
However, Barclays' ambition to gain a bigger slice of the mortgage market will bring a smile to the millions of savers in the former building societies who kept shares after the demutualisation fad of the 1990s when a stream of mutuals, including the Woolwich, Halifax and the Northern Rock, decided to try their luck as publicly-quoted companies.
The assumption at flotation was that their independence would be short-lived and bids would come rolling in from at home and overseas.
This sent the share prices of the mortgage banks soaring.
But when the bids failed to emerge - because the big banks were reeling from crises in Asia and Russia and difficulties with their investment banking operations - the shares fell back, hopes of offers faded and small investors holding shares in the former mutuals learnt the hard way that prices go down as well as up.
Now with the Barclays bid, there will be an opportunity to cash in, although the offer may be considered less welcome when they find they have to accept Barclays shares as well as a small amount of cash. …