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British BankingContinuity and Change from 1694 to the Present$
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Ranald C. Michie

Print publication date: 2016

Print ISBN-13: 9780198727361

Published to Oxford Scholarship Online: December 2016

DOI: 10.1093/acprof:oso/9780198727361.001.0001

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Convergence and Conversions, 1970–1997

Convergence and Conversions, 1970–1997

(p.184) 7 Convergence and Conversions, 1970–1997
British Banking

Ranald C. Michie

Oxford University Press

From the 1970s, the divisions that government intervention had maintained in the British banking system gradually broke down. The controls led large banks to adopt very conservative practices leaving savers and borrowers frustrated and searching for alternatives. The Bank of England then encouraged greater competition. Competition grew, leading to greater risk-taking and the Secondary Banking Crisis of 1973/4. To prevent the collapse of the entire banking system, the Bank co-ordinated a rescue of the smaller banks. This enhanced the position of the joint-stock banks as they absorbed the business of the secondary banks. In 1979 the government abandoned exchange controls. This was a catalyst for change in which the divisions between different types of banks broke down. In 1986 Big Bang ended the divisions between commercial and investment banking. The separation between banks and building societies ended in 1997, with a number of the latter converting into banks.

Keywords:   Secondary Banking Crisis, Big Bang, Bank of England, banking regulation, building societies, investment banks, commercial banks, demutualization, exchange controls

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