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LONDON (Alliance News) - Banks should sell their stake in a crucial piece of UK payments infrastructure to help increase innovation and competition, the UK's Payment Systems Regulator said on Thursday.
The PSR, which is a subsidiary of the UK's Financial Conduct Authority but has its own objectives, managing director and board, was publishing the findings of its market review into the ownership and competitiveness of the infrastructure that supports Bacs, Faster Payments System (FPS) and LINK. The regulator now wants feedback on the report.
The payment systems are currently owned by a relatively small number of banks, which also control the single infrastructure provider that they rely on to process payments, 'VocaLink'. The regulator said that banks should sell part of their stakes in VocaLink in order to "open the market" and allow for "more effective" competition and innovation.
Among the shareholders, Lloyds Banking Group PLC owns roughly 25% of VocaLink, Royal Bank of Scotland Group PLC has about 21%, HSBC Holdings PLC has about 16%, Barclays about 15%, with other shareholders including Santander Group, Nationwide Group, and CYBG PLC and other smaller interests. Those lenders are also members of Bacs, FPS and LINK, as are Santander, Nationwide and CYBG.
While FTSE 250 lender Virgin Money (UK) Holdings owns 0.79% of VocaLink and is a member of Bacs and LINK, it is not a member of Faster Payments.
In the UK, VocaLink processes over 90% of salaries, more than 70% of household bills and almost all state benefits. Nearly every business and person in the UK uses its technology and last year the company processed over 11 billion transactions with a value of GBP6 trillion.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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