Q&A: What the RBS break-up will mean for your account

Published on Wednesday 4 November 2009 08:32

What is being sold?

RBS is selling 318 branches, made up of the former Williams & Glyn's branches in England and Wales and its NatWest branches in Scotland, as well as its insurance business, which includes brands such as Churchill, Direct Line, Privilege, and Green Flag.

The group is also selling its global merchant services business, which handles credit and debit card transactions, and its majority stake in the Sempra commodity trading business.

Lloyds is selling its Lloyds TSB branches in Scotland and a number of branches in England and Wales, online bank Intelligent Finance and its Cheltenham & Gloucester mortgage arm.

What does this mean for customers?

Both groups have stressed that customers will see no immediate changes. The sell-off will take place over the next three to four years and customers will be kept informed about the changes.

However, existing customers of the brands and branches that are being sold will be transferred to the new owner.

I have a mortgage with one of the brands that is being sold, how will I be affected?

The move will have no impact on your current mortgage deal, such as a fixed-rate mortgage or lifetime tracker, as the new owner will not be allowed to change the terms and conditions of these. Also, the sale is three to four years away and many mortgage terms are shorter than this anyway.

Where customers are likely to see a difference is when they come to the end of their existing deal.

My current account is at one of the branches ear-marked for sale. How will I be affected?

If one of the branches being sold is your home branch, your current account will be transferred to the new owner. It will be able to change the terms and conditions of the account as long as it gives you sufficient notice.

The government has said it wants the businesses to be sold to small or new players in the banking market, and this means you are likely to have access to a reduced branch network. Any new player is likely to come in with competitive products in a bid to win market share.

I'm not happy about the prospect of being transferred to a new bank; what can I do?

If you bank with one of the branches being sold and you want to stay with your existing account provider, you can transfer your account to a branch that is not being sold.

Will these changes increase competition on the high street?

It is hard to know exactly what impact the move will have on competition until it is known who is buying the businesses and what their business plan is, but it is likely to increase competition.

Commentators have previously expressed concern that the wave of consolidation seen since the credit crunch struck was stifling competition in the market. It is thought that any new players will want to grow their market share, and they are likely to do this through offering competitively-priced products.

They may also compete in other areas, such as through product innovation or service levels, for example having longer branch opening hours.