COMPETITION AND CUSTOMER CHOICE
There will be no reduction in competition in UK banking if HSBC merges with Midland. A Lloyds merger would reduce customer choice.
Under the HSBC proposals:
Midland's name and identity, dating from 1836, will be retained.
It will continue to operate in the High Street as of the big four clearing banks.
A Lloyds takeover would result in:
The closure of up to 1,000 branches.
The end of Britain's third biggest bank.
A Lloyds takeover would lead to monopoly banking in some towns, which currently have only a Lloyds and a Midland branch.
HSBC's approach is to build and expand rather than destroy and contract.
"HSBC is backing us in the high streets to bring forward our spending on branches and technology and to improve the competitiveness of our services." (Letter to MPs from Midland's Chairman, 14th May, 1992)
EFFECT ON SMALL BUSINESSES
"The importance of the small business market to the bank's core UK business cannot be over-emphasised. This position is recognised in the extent of the resources dedicated throughout the network - prime among them Midland's people - to this vital community-based service." (Midland Annual Report, 1991)
Small businesses would be particularly hard hit by a reduction in competition. A merged Lloyds-Midland Bank would have about 30% of the market for loans to businesses of up to 200 employees. That would be larger than either National Westminster's or Barclays' share and would mean that the three biggest banks would control nine tenths of the market. (Ref: Economist, May 2nd, 1992 and Sunday Times, May 3rd, 1992)
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