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and the Banking Insurance and Finance Union (BIFU). A firm of research consultants in the Medway area (Rochester Research) sent a copy of its report on a recent survey on "Business Banking in the Medway Towns". In addition, we have had representations (direct or through MPs) from 9 businesses (two of them medium-sized) and about 30 private individuals (approximately half of them Midland employees). Apart from some of the employees' letters, the correspondence bears no signs of being the product of a "campaign" orchestrated by or for any of the parties.
53. None of the representations was favourable to Lloyds or adverse to HSBC. All broadly expressed concern at the diminution in competition among clearing banks, and the job losses, which they feared would result from a Lloyds/Midland merger. Several argued from personal experience of both banks that Midland provided a better and cheaper service. Rochester Research's report (not, apparently, commissioned by or for any of the parties) expresses concern about the reduction in the number of bank branches available to small business customers, and suggests that Midland's charges tended to be lower than average, and Lloyds' higher. The FSB repeated concerns they had previously expressed to the office about the lack of competition and the poor service their members experienced with the "big four". They also pointed to the difficulty likely to be faced by small businesses who currently banked with both Lloyds and Midland; after the merger they might not be allowed to keep the same level of overdraft etc as before since the merged bank would be in a stronger position to reduce its exposure. The UIC considered that a merger with Lloyds was likely to reduce the funds available to small businesses, and (because of its large size) cause the merged bank's managers to become even further out of touch with their customers. The FPB raised similar concerns to the other small business organisations. The two consumer organisations both favoured a reference to the MMC; NCC stressing the difficulty and cost of changing banks, whilst acknowledging that building societies offered come competition; CA
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suggesting that Lloyds' claim that its proposals would lead to cost savings which would be channelled back to consumers through improved services and lower charges needed very careful scrutiny.
VIEWS OF THE BANK OF ENGLAND
54. The Bank has commented (Appendix I) on the prudential aspects of Lloyds's and HSBC's proposals, and on competition issues. It said it was satisfied (or close to concluding) in regard to HSBC's "fitness and properness" under the Banking Acts, and that it has sufficient powers to deal with any likely problems in this area. (On 19 May it was reported that the Bank had given formal permission for HSBC to acquire Midland). It has no regulatory concerns over the Lloyds proposal. On competition, it expresses some concern about the effect of the Lloyds proposal on the market for lending to small businesses.
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