European Commission flexes its muscles over British banks
Times: The move last week by the European Commission to break up the Royal Bank of Scotland and Lloyds TSB, the bloated beneficiaries of state aid, may be a clue as to the future and unexpected direction of the banking sector.
In the past two years the sector in Europe and America has moved from an idyll of market-driven, light-touch regulation to a regime of control and diktat by bureaucrats and regulators.
How is it going to shape up in the medium to long term? The commission’s intervention was not in itself unexpected and talk of RBS and Lloyds being “penalised” (as some commentators described it) may be slightly wide of the mark.
Michael Grenfell, of Norton Rose, says: “The UK had to get the approval of the European Commission to make rescue aid available to the banks last autumn. This normally lasts for six months. However, because of the scale of the crisis Neelie Kroes, the European Commissioner for Competition, took a pragmatic view and permitted it to be extended to 12 months.”