Regulation is creating competition and competition is squeezing profit margins so tightly that some, like Tesco, are checking out of the market entirely AlamyThe forces that have driven Tesco Bank out of the mortgage market and caused Nationwide to warn that its profit margins would shrink this year can be traced back to the financial crisis a decade ago. Out of those ruins came a new set of rules to ensure that households never again had to worry that their bank might be brought down by its “casino” investment banking operation. Global banks such as HSBC and Barclays were given until January 1 this year to build a ringfence around their British retail divisions. In practice, they had to create separate high street banks with their own loss-absorbing capital. Customer deposits that once might have funded a portfolio of toxic sub-prime mortgages also would be restricted to funding…

Source: The Times May 21, 2019 23:15 UTC