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from Breakingviews:

UK banks have much to fear from latest probe

By Chris Hughes

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The latest competition review of UK banking should aim to be the last. An antitrust probe in 2000 led to limited price controls after concluding that British lenders made excess profit. There were two more big investigations after the financial crisis. Yet concerns about market inefficiencies persist. That suggests the Competition and Markets Authority should do something radical this time.

The CMA says it is minded to conduct a comprehensive investigation of UK banking later this year. The industry is at least as oligopolistic as it was 14 years ago. Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have 77 percent of personal accounts and 85 percent of small-business banking.

So-called challenger banks have emerged from disposals by Lloyds and RBS as mandated by the European Commission. But the market has become more concentrated, especially in mortgages, after Lloyds swallowed Halifax and Bank of Scotland and several former building societies collapsed. Customer dissatisfaction is high. Yet just 4 percent of SME customers and 3 percent of personal customers switch accounts annually. The banks say things are already changing for the better. Twas ever thus.

from Breakingviews:

RBS thankfully bins bad-bank spinoff folly

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The UK government has taken four months to work out what almost everyone knew all along. Splitting off the toxic assets of Royal Bank of Scotland into a separate bad bank is a bad idea. The 81 percent taxpayer-held bank will now pursue an eminently more sensible plan to build capital by shrinking non-core assets more quickly.

from Global Investing:

Bond market liberalisation — good or bad for India?

Many investors have greeted with enthusiasm India's plans to get its debt included in international indices such as those run by JPMorgan and Barclays. JPM's local debt indices, known as the GBI-EM,  were tracked by almost $200 billion at the end of 2012.  So even very small weightings in such indices will give India a welcome slice of investment from funds tracking them.

At present India has a $30 billion cap on the volume of rupee bonds that foreign institutional investors can buy, a tiny proportion of the market. Barclays analysts calculate that Indian rupee bonds could comprise up to a tenth of various market capitalisation-based local-currency bond indices. That implies potential flows of $20 billion in the first six months after inclusion, they say -- equivalent to India's latest quarterly current account deficit. After that, a $10 billion annual inflow is realistic, according to Barclays. Another bank, Standard Chartered, estimates $20-$40 billion could flow in as a result of index inclusion.

from Breakingviews:

Don’t bet on RBS good bank/bad bank split

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Don’t bet on a good bank/bad bank split at Royal Bank of Scotland. George Osborne, the UK chancellor, used his Mansion House speech on June 19 to announce a study on the possible hiving off the state-held lender’s ropey assets. It doesn’t mean that will happen when the Treasury reports back in the Autumn.

from Breakingviews:

UK banking report pulls more punches than it lands

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The long-awaited parliamentary report on UK banks is underwhelming. In part, that’s a reflection of the Parliamentary Commission on Banking Standards’ fuzzy remit and limited powers. Set up last July in the wake of Barclays’ Libor shame by Chancellor George Osborne to address perceived ethical failings in the industry, the commission’s biggest hits come when it addresses that original purpose.

from The Great Debate UK:

Don’t cry for me RBS

"Don't cry for me, RBS" could certainly be the lament being sung by Stephen Hester, outgoing CEO of bailed out Royal Bank of Scotland, after the shock announcement that he will have left the bank by the end of this year. CEOs of banks come and go; however, the government stake in RBS makes this CEO particularly important.
There are two things that make Hester’s departure fascinating: firstly, the fact that the RBS board along with the Treasury have concentrated on how a new leader is needed to privatise the bank. Secondly, the fact that Hester doesn’t seem to want to go.

During an interview with BBC Radio 4 less than 24 hours after the announcement was made, Hester admitted that he wanted to take the bank through its privatisation process “for me that would have been the end of the journey.” However, that was not meant to be, and he said he “understood” that “new blood” at RBS was a good thing.

from Breakingviews:

Hester’s early exit is right for RBS – and him

By George Hay
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It was either now or what might have felt like never for Stephen Hester. Royal Bank of Scotland’s chief executive since 2008 is leaving later this year. Hester had to move on before the process to sell down the government’s 81 percent stake begins in earnest - or stick with the job for at least another five years.

from The Great Debate UK:

Do you want shares in RBS and Lloyds?

By Matt Scuffham, UK Banking Correspondent.

The government should hand most of its shares in Royal Bank of Scotland and Lloyds Banking Group to the public, an influential political think tank says, in what would be the country's biggest privatisation.

The proposal would enable 48 million taxpayers to apply for shares at no initial cost and with no risk attached, the think tank said. A 'floor price' would be set and taxpayers would make a profit on any rise in the shares above that level.

from The Great Debate UK:

How will the privatisation of RBS and Lloyds affect gilt supply?

--Sam Hill is UK Fixed Income Strategist at RBC Capital Markets. The opinions expressed are his own.--

The return of RBS and Lloyds to the private sector is moving up the agenda but as the UK government prepares to set out the strategy for privatisation, the spotlight will, once again, fall on the gilt market and the public finances.

from Global Investing:

Turkey’s (investment grade)bond market

We wrote here yesterday on how Turkish hard currency bonds have been given the nod to join some Barclays global indices as a result of the country's elevation to investment grade. Turkish dollar bonds will also move to the Investment grade sub-index of JPMorgan's flagship EMBI Global on June 28.

Local lira debt meanwhile will enter JPM's GBI-EM Global Diversified IG 15 percent Cap Index --  the top-tier of the bank's GBI-EM index. But the big prize, an invitation into Citi's mega World Government Bond Index, is still some way off. Requiring a still higher credit rating, WGBI membership is an honour that has been accorded to only four emerging markets so far.

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