Watchdog probes bank competition

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Britain’s financial markets watchdog will for the first time investigate whether banks are offering firms a fair and transparent service for the billions they earn in fees for arranging mergers and bond and share sales.

After four years of scandal over manipulation in the currency market and of Libor interest rates, the Financial Conduct Authority’s competition review turns the spotlight on primary markets which are crucial to funding of corporate investment.

The FCA had voiced concern in February that customers may not be getting value for money from wholesale banking services - a £10bn sector in Britain.

“The market study will examine whether there are areas of investment and corporate banking services where competition may not be working well,” the FCA said in a statement.

The review comes at a time of increased emphasis on market-based finance in the European Union as the bloc plans a Capital Markets Union whose aim is to offset the effect of banks reining in lending.