Asapenaltyforallthestateaidtheyhavereceived,andtostimulatecompetitionthroughnewentrants,thebankswillhavetodivestassetscomprisingalmost10%oftheretailbankingmarketoverthenextfewyears。

RBSwillsellitsEnglishandWelshRBSbranchesundertheWilliamsGlynbrandandalsoloseitsinsurancebusiness。

LloydswillditchtheTSBnetworkinScotlandandtheCheltenhamGloucesterbrand。

ThegovernmentwillalsoreturnNorthernRock(strippedofitstoxicassets)totheprivatesector。

Willthepackagework?

The$64bndollarquestion,saidEdmundConwayonTelegraph。

co。

uk,iswhetherthislatesthugecashinjectionwillhelptheeconomybyboostinglendingtohouseholdsandbusinesses。

Unfortunately,economistsareratherlukewarmonthiscrucialissue。

Thereseemslittlescopeforeithertouplendingsignificantly,giventheircurrenttradingprospects,saidDavidProsserinTheIndependent。

Bothareintheredandfacingplentymorewrite-offsonbadloans。

Worse,RBSisobligedtosellsomeofitsmostprofitableassets。

Notetoothatbothexpecttheeconomytoimproveoverthenextyear。

Adouble-diprecession(assumingweevenmakeitoutofthefirstpartofthedownturn)woulddelaybothbanksrecoveryplansfurther。

Whatsmore,thelatestinjectionfallsshortoftheamounttheIMFthinksUKbanksneedinorderforlendingtogetbacktonormal,saidMichaelSaundersofCitigroup。

Soeventhisrecapitalisationmaynotbeenough…wesuspectcreditavailabilitywillremainrelativelypoor。

Ashake-uponthehighstreet?

Asfarasgreatercompetitioninthemarketisconcerned,itisoutrageouslycheekyforthegovernmenttoclaimcreditforspurringcompetitioninthebankingmarket,saidNilsPratleyinTheGuardian。

ItwasreallyNeelieKroes,theEUCompetitionCommissioner,whocrackedthewhip。

Asforthechanges,letsnotpretendarevolutionistakingplace。

Indeednot,agreedHugoDixononBreakingviews。

Insomekeyareas,thesectorisstilllesscompetitivethanitwasbeforethegovernment-inducedmega-mergerbetweenLloydsandHBOS。

Thatgavethecombinedgroup30%ofboththemortgageandthecurrent-accountmarket。

Post-disposals,thatfallsto25%ofeachmarket。

ButLloydsstillhasabiggermarketsharethaneitheritselforHBOShadpre-merger。

Ataleoftwobanks

BothLloydsandRBSwerethoughttobeinbigtroubleearlierthisyear。

Butfollowingthisweeksnews,itsclearthatLloydshaspulledoffagreatescapeandRBShasbeenclobbered,saidPratley。

Helpedalongbyanimprovingtrendonthebad-debtfrontandarecoveryinthestockmarket,whichhasgiventheCitytheconfidencetounderwritearightsissue,LloydshasmanagedtoavoidtheAPSandaseverepenaltyfromBrussels,saidDavidWightoninTheTimes。

ItmaynotbetoolongbeforeLloydsbeginstoresembleanormalbank,notedGeorgeHayonBreakingviews。

ButRBS,clearlydeemedsicklierbytheauthorities,couldwellbeawardofthestateforyears。

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