Via @ACCANews, ,we arrive at this story about the early stages of the Vickers enquiry into the future of banks in the UK.  On the agenda is the possibility of breaking up the banks.  Interestingly, Sir John Vickers will also cover Santander, up till now the darling of the UK political class, as it has been called on time and time again to bail out various desperate bits of the UK sector.

Bank owners might feel a bit aggrieved.  Lloyds really only started wobbling after they agreed, unwisely, to take over HBOS as a favour for the Scottish tragedy, Gordon Brown.  Barclays and HSBC didn't take any public money but are accused of having benefited from the stability afforded by the government's stimulus package.  RBS was perhaps the only basket case among them, but even it was a solid bank until Sir Fred went loopy and bit off more than he could chew with the ill-fated ABN Amro adventure.

But there's really not much evidence that breaking them up will make things any better.  RBS's investment ('casino') banking made good profits this year, dragged down by its crappy loan book.  Breaking them apart would only expose the full horror of the awful side of its business to market forces.

And there's an interesting undercurrent to the Vickers review - the Guardian article interprets it as the government feeling that there is insufficient competition in the market.  In this regard, it's rather like the current House of Lords enquiry into auditing, which also grumbles about a perceived lack of competition.  But lots of markets have a few big players and a cluster of smaller ones - auditors and banks aren't unique here.  Supermarkets, oil companies and pharmaceuticals companies are also dominated by big players, without any real competition issues.

If you were feeling particularly unkind, you could observe that the political process suffers to a much greater extent from the domination of a few big players.  Shall we break up the political parties, even as they try to group together?

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Filed under: Economics, Politics, Regulation with tags abn amro, acca, banks, barclays, big 4, competition and choice, gordon brown, guardian, hsbc, lloyds banking group, royal bank of scotland, santander, sir john vickers