McMonkey, yes but Miliband's 'brilliant' policy doesn't actually address what the problem is, and I fail to see the benefits really.|
You can't just create new banks out of thin air. Say we decide that The Bank of McMonkey is one of the new ones. Congrats, here is £10bn of deposits from individuals and 75 branches across the UK. Do you have the accounting systems to segregate these deposits? Do you have the product suite to stop them going elsewhere? Do you have the network support for your customers to be able to access their money? And that's before we even start on you making a profit - what are you going to do with the money? Are you Basel 2 compliant? Are you ready for Basel 3? Has the FCA and the PRA signed off on your underlying capital? You have underlying capital, right?
Radically reducing the size of banks makes them staff heavy which leads to redundancies, makes their fixed cost base disproportionate which leads to losses, renders your product suite (which was designed to work with a large bank and how has to adapt to a small bank) borderline obsolete, and confuses your customers with paperwork, which leads to more red tape.
Radically increasing these other 'new' banks stretches their resources to the limit, which leads to fraud and error and puts customers' money at risk, creates regulatory requirements which the new banks will have to adopt very quickly which leads to potential regulatory breaches, and stretches their asset base (they aren't just getting these customers and branches for free).
High street banking isn't a real problem, or at least it isn't a problem this really solves.
LB, you really are a massive geek.