Britain Has Some Of The Oldest Banks

British banks are considered to be some of the strongest and wealthiest banks in the world:

Banking in the UK has its origins in the 17th century when following the abolition of monasteries by King Henry VIII, goldsmiths hoarded gold and started transactions based on the precious metal. But, it was after the First World War that the ‘Big Five’ - Westminster, National Provincial, Barclays, Lloyds and Midland - got into annexing some of the smaller players and consolidated themselves. But the wars and the aftermaths prevented banks from a real recovery and they had to wait until 1950 when they expanded their reach through branches and created the concept of the High Street bank. So, in 1960, the Big Five became the Big Four and several regional banks were annexed by these 4 entities. The Banking Act came into force in 1976 and the Bank of England became the sole supervisory authority then. One of the major events in the sector happened in the wake of the financial crisis, when the Halifax Bank of Scotland (HBOS) merged with Lloyds TBS to create the single biggest banking group then, the Lloyds Group. It had a market share of around 27%.

Britain had introduced another regulator for the banking sector - the Office of Fair Trading. Subsequently, through the Financial Services (Banking Reform) Act 2013, it was ensured that the sector underwent what is described as a paradigmatic shift toward the principle adopted by the US on risk averse strategies. This is better known as ‘ring-fencing’ retail banking to protect consumers and creating requirements for certain amounts of capital to be retained to act as a buffer against market instability.

Like banks in the US or in the EU countries, banks in Britain are subject to tight regulation. Regulators balance the need for financial stability and for ensuring that banks can pass any stress test they are faced with, as well as ensure that financial markets remain competitive.

REGULATORS