Economics Business
Greenwich School of Management
11
BUSINESS ECONOMICS
Jodie dompreh atie
Table of Contents
INTRODUCTION1
INTRODUCTIONThe UK deregulation of the 1970s and 1980s freed the way for banks to benefit and take advantage of new prospects through globalisation and financial improvement. Unchained from regulatory restrictions, banks began to branch out into new activities, using current expertise and infrastructure to cross-sell new products.
Until the Big Bang of 1986 it was prohibited for foreign firms, to become members of the London Stock Exchange. The deregulation also led the way for venture banking operations on the American model to start working in London. It also replaced open uproar trading on the floor of the exchange with electronic trading.
The Big Bang itself, on October 27, 1986, corresponded with the coming of screen trading, but was essentially about deregulating the Stock Exchange. Above all, it enabled 100 per cent outside ownership of member firms – a move enforced by the Thatcher government on a largely enthusiastic City, so that London could operate on a modern, properly capitalised basis as an international financial centre. By the 1980, preferential regulation of mutual was removed and the bank deregulation meant that restrictions on investment portfolios no longer existed.
This also resulted in banks and building societies competing with each other on the whole range of financial services. The effect of the deregulation of the UK Building Societies Act of 1986 opened a way for competitions between building societies and commercial banks, also introducing a procedure for the demutualisation of building societies. This in turn resulted in a number of mergers and takeovers and enabled the long established banks to benefit from the specialist products, services, and customer base of the former building societies. Demutualised insurance companies were also bought by these larger banks but still trade under their own name.
11
BUSINESS ECONOMICS
Jodie dompreh atie
Table of Contents
INTRODUCTION1
INTRODUCTIONThe UK deregulation of the 1970s and 1980s freed the way for banks to benefit and take advantage of new prospects through globalisation and financial improvement. Unchained from regulatory restrictions, banks began to branch out into new activities, using current expertise and infrastructure to cross-sell new products.
Until the Big Bang of 1986 it was prohibited for foreign firms, to become members of the London Stock Exchange. The deregulation also led the way for venture banking operations on the American model to start working in London. It also replaced open uproar trading on the floor of the exchange with electronic trading.
The Big Bang itself, on October 27, 1986, corresponded with the coming of screen trading, but was essentially about deregulating the Stock Exchange. Above all, it enabled 100 per cent outside ownership of member firms – a move enforced by the Thatcher government on a largely enthusiastic City, so that London could operate on a modern, properly capitalised basis as an international financial centre. By the 1980, preferential regulation of mutual was removed and the bank deregulation meant that restrictions on investment portfolios no longer existed.
This also resulted in banks and building societies competing with each other on the whole range of financial services. The effect of the deregulation of the UK Building Societies Act of 1986 opened a way for competitions between building societies and commercial banks, also introducing a procedure for the demutualisation of building societies. This in turn resulted in a number of mergers and takeovers and enabled the long established banks to benefit from the specialist products, services, and customer base of the former building societies. Demutualised insurance companies were also bought by these larger banks but still trade under their own name.
References: Economy watch: Is Britain heading back into recession? | This is Money. 2011. Economy watch: Is Britain heading back into recession? | This is Money. [ONLINE] Available at: http://www.thisismoney.co.uk/money/news/article-1616085/Economy-watch-Is-Britain-heading-recession.html. [Accessed 09 December 2011].