(23 April 2010 – UK) New British financial institutions looking to take advantage of the public’s anger at the nation’s largest banks face a daunting task, according to Citgroup’s research team.New entrants to the market including Tesco, Virgin, Metro Bank and Walton & Co will face an up hill battle as Britain’s largest lenders, who currently control 85 percent of the market, have all emerged stronger than ever from the global financial crisis, according to Citi.
The task ahead became apparent when earlier this week Tesco revealed its finance arm reported a 9.4 percent drop in revenues to just £860 million.
Citi said that the new entrants’ biggest hurdle will be the fact that prior to the GFC they relied on the securitisation market for funding.
However, post GFC the UK Residential Mortgage-Backed Securities (RMBS) market is not likely to make a significant comeback, and if it did the established players would be the first to exploit it to reduce funding costs, Citi said.