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London's stock market is poised for a bank equity binge in 2014 with several financial groups hoping to sell off portfolios of retail banks in a gathering U.K. recovery. That's the story, from government and corporate spinners, but you might wonder if behind the scenes, the hidden plan might be the dumping of redundant high-street banks before their bread-and-butter business is lost for good, devoured by Google and Facebook.

Lloyds Banking Group is preparing to spin off TSB, a chain of renamed retail branches; RBS is flogging the posh William & Glyn's brand and the Co-operative Group hopes to list shares in its banking arm, the latter having narrowly escaped insolvency. Last week's rumour that HSBC Holdings PLC, the self-styled "world's local bank" would cast adrift its U.K. banking business, drew quizzical commentary from financial analysts. The global financial giant was clearly flying a kite – some suggested HSBC wanted to shed its exposure to the U.K.'s worsening regulatory environment while meeting the new requirement to ring-fence its retail business.

Still, the prospect of a glut of branch bank equity in 2014 looks suspiciously like a race to the exits by financial firms who know that the old world of branches, managers and cash tills is heading for extinction. If HSBC is contemplating becoming less local in its U.K. home market, it may be because their "local" knowledge tells them that in parts of Africa, ordinary people are doing cashless payment transactions by cellphone without the need of complex apps, not to mention debit cards or cheques.

We know that money is just data, mere bytes of information. For retail banks there are only two issues that matter anymore: how to make the transfer of moneydata secure, and how to make it convenient. Unfortunately, various non-bank organizations are making huge inroads in these areas. with services, such as PayPal and Google Wallet, that could theoretically develop into much larger-scale payment systems that bypass the banking networks.

What slows the transition down is the issue of deposits and lending which are subject to tight regulatory control. It seems unlikely that a Facebook or Google, already squabbling with governments about eavesdropping and Internet safety, would want to get involved in something as thorny as bank regulation.

The real risk for the banks, however, is disintermediation, where the social media and Internet platforms simply channel moneydata from customers to retailers or from lenders to borrowers without bank intervention. Crowd funding and peer-to-peer lending platforms are still in their infancy, but that is probably because they lack the connection to the vast pot of money that would be available from a Google-bank or Face-bank.

Finally, there is the money issue, made relevant by the bizarre phenomenon of bitcoin, the ultimate disintermediation tool. If the unit of value as well as the medium of exchange moved out of the world of banking and into the ether, the transition to a debanked world would be complete. The chance of any government tolerating such an eventuality is almost nil, but it underscores the potential magnitude of the shift we're now seeing.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/03/24 3:54pm EDT.

SymbolName% changeLast
BC-N
Brunswick Corp
+2.63%95.71
C-N
Citigroup Inc
+1.77%62.75
G-N
Genpact Ltd
+1.39%32.76
G-T
Augusta Gold Corp
-1.94%1.01
GOOG-Q
Alphabet Cl C
+0.16%151.94
GOOGL-Q
Alphabet Cl A
+0.13%150.87
HSBC-N
HSBC Holdings Plc ADR
-1.79%38.99
LYG-N
Lloyds Banking Group Plc ADR
+1.94%2.63

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