Big changes ahead for the banking sector

THIS week’s shock decision by the EU demanding the break-up of Dutch banking giant ING has caught commentators and analysts by surprise.

The demand that ING get back to its core lending charter and sell on its international insurance businesses is a condition the EU saw fit to impose on the bank as a recipient of state aid. Belgium’s KBC and Franco-Belgian Dexia are awaiting European Commission rulings before they know their fate.

Closer to home, Royal Bank of Scotland and Lloyds, effectively state-controlled, expect to suffer the wrath of the EU also and to be ordered to dispose of assets once the EU has had time to assess their cases.