James Moore: Barclays' ING buy is no cause for celebration

Outlook A statement of intent by Antony Jenkins? The acquisition of ING Direct looks that way. The new boss of Barclays has barely got his feet under the desk, and he is closing a deal. What's more, it is for a retail bank that will bring 1.5 million customers under the wings of the blue eagle. And ING is in effect paying Barclays to take it of its hands.

The Dutch bank is trying to pay back taxpayers for bailing it out, and kicking some capital over to Barclays in return for taking on the business frees up even more. In the grand scheme of things, it is not a bad deal. But Barclays has long wanted to rebalance its business away from investment banking, which is profitable but volatile and causes huge headaches with the regulators and public when bonus time comes around. This helps with that ambition.

However, apart from Barclays shareholders, who are getting a very good deal, nobody's really cheering. When ING entered the UK with its direct bank, it was seen in bank speak as a "challenger" brand. It offered a suite of very attractive products, including a one-time market leading savings account, primarily via the internet. And it was exactly the sort of new entrant to the UK market regulators say they want to encourage, and consumer groups say is desperately needed.

With most of Europe's banks in little better health than our own, there won't be any future ING Directs making their debuts on these shores for years, if not decades. McKinsey, the management consultant, has released a report warning that it is going to take banks a long time to reshape their business models so they can produce sustainable products.

With another company falling by the wayside and being rescued by an existing player, competition in the UK market has been reduced again. Good news for profit margins, bad news for innovation and the price that consumers pay for financial services. If this continues, McKinsey might need to revisit its projections.