View more on these topics

OFT to monitor public owned banks over competition concerns

The Office of Fair Trading is to investigate whether market competition will be unfairly hampered by banks propped up by the government.

The watchdog has published a report today which rules that public ownership for Northern Rock did not unfairly impact on competition in the year to February 2009.

The OFT was obliged to produce a report investigating competition concerns when the bank was nationalised in February 2008.

One concern was that Northern Rock would be able to take advantage of cheaper capital to offer more competitive rates on its mortgages.

Given the lender’s original policy of winding down its mortgage book, the OFT have ruled these concerns are unlikely to have been borne out.

But now that Northern Rock has pledged a £14bn boost to mortgage lending over the next two years, these concerns may be reignited.

The OFT says it will continue to monitor any emerging competition concerns across the financial services sector, including banks that have since received government support.

The report reads: “Given the significant changes in the sector since the commitment to produce a report on Northern Rock was made, the OFT has agreed with the Treasury that this approach is no longer the most suitable.

“Going forward the OFT will, as reported in the Pre-Budget Report 2008, publish a Financial Services Strategy in March 2009 for consultation followed by a Financial Services Plan later in the year.

“It is anticipated that work conducted within the plan will cover both consumer and competition issues across the financial services sector.

“It will include consideration of competition issues relating to public support to banks, including where relevant Northern Rock.”

Recommended

HSBC sees mortgage sales up 200%

Full-year results from HSBC reveal that its Rate Matcher campaign pushed up mortgage sales by 200%, with total new mortgage sales hitt-ing £17.1bn.

Three catalysts for European equities

By Rob Burnett, Manager of the Neptune European Opportunities Fund In recent weeks, the bear case for European equities has become more pronounced on the back of weaker-than-expected GDP data and deflation concerns. This softening in economic momentum has led some investors to question whether the ECB is behind the curve and indeed whether it […]