Saturday, October 30, 2010

UK banking system overconcentrated

According to the advert on the left of this article, the USA has 7,830 banks of which 437 are judged to be in immediate danger of failing. Assuming that happens, that leaves 7,393 banks servicing a population of 310,592,000 - equivalent to a little over 42,000 people per bank.

The UK has "about 400" banks and building societies (FSA list here) to service a population of 62,008,049 - equivalent to over 155,000 per bank.

In other words, the US has about 3.69 times the number of banks per million head of population - a much smaller average customer base, but a correspondingly larger reserve of lesser-sized organisations to take up the slack if one or more of the big ones goes down.

This suggests that it is even more important for the UK to consider breaking up the biggest outfits, because the fall of one of our greatest trees would create a much bigger clearing in our forest than it would in the States.

No comments: