Big Bank’s profits cost every UK household £475 each year

Now that two of the Big Banks have published last year’s results, Zopa estimates that when results are in from all five, the cost of these profits to each household in the UK on average will be a staggering £475.

Based on detailed analysis of the accounts of the UK’s largest five banks (HSBC, HBOS, RBS, Lloyds and Barclays), Zopa – the world’s first marketplace where people meet to lend and borrow money to get a better deal by cutting out the banks – has estimated that every household in the UK on average will have contributed more than £475 to the profits made from UK retail banking last year. Zopa has emphasised that this contribution is not derived from the total charges taken by the Big Banks, but just profits. A much, much larger cost per household would apply to the total revenue taken by banks – the profit figure is the much reduced number left after Bank running costs are knocked off.

Zopa provides the first real alternative to dealing with the Banks. It is a big part of the Web 2.0 phenomena, which through technology is unleashing the People Power that is transforming the music industry (iTunes, iPod, MySpace), broadcasting (YouTube, blogging), communications (Skype) and commerce (eBay). Zopa makes it simple, easy, safe and even fun to borrow from and lend to other individuals, cutting out the Banks, and thereby offering everyone a much better deal. Zopa loans consistently top the best buy tables on uSwitch and Moneysupermarket and Zopa lenders enjoy returns far higher than Banks saving accounts. And Zopa charges just a 0.5% fee to borrowers on the amount borrowed and 0.5% p.a. to lenders on the amount they have lent out.

The same analysis run on the Big Five’s results for 2005 showed an average cost per UK household of £415. But with the results published so far this week from Barclays and Lloyds, Zopa has estimated that the final average figure for 2006 will be £475 per UK household, an increase of more than 14% year on year.

James Alexander, co-founder and CEO of Zopa said, “Consumers are right to question whether or not it is appropriate that the average UK household is contributing £475 p.a. to the bottom line of the UK’s five largest banks. Given that this is just the profit contribution, I shudder to think what the total cost is to the average household for all of their banking? It’s no surprise to me that people are increasingly looking for alternatives to the Big Banks and Zopa has already demonstrated the benefits of people taking back the power to help themselves get a better deal.”