Calls to break up RBS, Bank of Scotland ‘duopoly’

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GOVERNMENTS in Edinburgh and London should act to break up the “duopoly of lending” held by RBS and Bank of Scotland in order to increase business access to finance, according to a Holyrood committee.

The Economy Committee wants the Scottish Government, UK Government and banking regulators to tackle the dominance of RBS and the Bank of Scotland in order to increase competition.

The committee claimed that RBS and Bank of Scotland hold a lending 'duopoly'. Pictures: Johnston Press

The committee claimed that RBS and Bank of Scotland hold a lending 'duopoly'. Pictures: Johnston Press

The two banks accounted for 70% of business lending in Scotland in 2012.

The committee made the call in its report on its inquiry into access to finance and alternative financing models.

MSPs took evidence from both RBS and Bank of Scotland, with the banks stating that, following a sharp dip in business lending in 2008, they are now actively seeking more customers and are “open for business”.

The committee said that while this was to be welcomed, it is not enough to “simply see more of the same type of lending” from the banks.

It called for an increase in new sources of credit and recommended that enterprise agencies develop better knowledge of alternative finance models so they can better advise businesses.

Committee convener Murdo Fraser said: “The problems of bank lending following the recession are well rehearsed.

“Whilst the picture has improved slightly, it remains one of the biggest issues facing small businesses.

“Whilst the two biggest lenders in the market have said that they are open for business, we need greater competition and not more of the same to unlock the potential of thousands of Scottish businesses.

“It is also not good enough for our publicly-funded enterprise agencies to be falling behind on advising business on what other routes of financing are available.

“They should be leading the way to make sure businesses in Scotland get the finance they need to grow and expand.”

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