The Bank of England has helped to increase competition in banking even though some officials may have preferred focusing entirely on keeping lenders safe, a BoE report said on Wednesday. The UK government is keen to weaken the dominance of the Big Four banks - Barclays, RBS, Lloyds and HSBC - on Britain's high streets by making it easier for new banks to enter the market.
It gave the BoE's Prudential Regulation Authority, which authorises banks, a secondary remit in 2014 to promote effective competition. Its core objective is to keep lenders safe. The PRA had achieved "positive results" regarding competition, the BoE's Independent Evaluation Office said in a report. "The PRA also delivered substantive reforms to authorisations policy to address potential barriers to entry into banking ahead of the secondary competition objective (SCO) coming into effect," the report said.
"Nevertheless, we also found residual misgivings in some parts of the institution about the compatibility of the SCO with the PRA's primary objectives; this may have slowed the PRA's progress in embedding and communicating on the SCO to a degree." The PRA, which has eased initial capital requirements and fast-tracked approval of top staff at new lenders, said it accepted the report in full and was clear about the need to consider the SCO throughout policy making.