Is breaking up the RBS and Lloyds a good idea?
I am totally unconvinced by the new Conservative policy of breaking up the partially state-owned banks as their ownership is returned to the private sector. Shadow Chancellor George Osborne's speech advocating this earlier this week was full of glib phrases - "too big to fail but potentially too big to bail" - but desperately short on substance and an understanding of the consequences of pursing such a policy.
We need a banking sector that is fit for the modern world, one that will be increasingly global despite the current retrenchment by some multi-national corporations. I say "we" and I really mean Britain here. If British banks are too small to serve the needs of global corporations then they simply won't get the business and huge amounts of capital will flow out of the City of London and the UK economy. That will cause untold economic damage.
Mr Osborne also failed to say what he would do with the banks that remain wholly in private hands. Is he expecting the Financial Services Authority and the Bank of England to break them up? If they aren't broken up, how will he stop Barclays, HSBC, Santander and others outside the UK regulatory net buying up the nicely parceled-up mini-banks he will create with his privatisation programme?
Where he could have a point that would have been worth making - because the government is very quiet on this - is how do you return such huge state holdings to the private sector without de-stabilising the stock market and the banking sector? Timing will be one part of the answer but selling stakes off in digestible chunks will very likely be another. This lack of an properly thought out exit strategy is one area where the opposition should be scoring a few hits on the government.
In memory
With great sadness we confirm that Sir David Rowland, our former Chairman from 1993 to 1997, has passed away. He played a critical role in safeguarding the future of the Lloyd’s market through perhaps its most difficult period.
— Lloyd's (@LloydsofLondon) February 18, 2019
More: https://t.co/2cS2H7c8Tk pic.twitter.com/jzL5UnIx4x
Most read
- FCA issues warning over clone broker
- Former Lloyd's chairman Sir David Rowland passes away
- Gareth Howell steps down as managing director of Axa retail
- Ageas management shakeup continues as Jonathan Price joins as CFO from Aspen
- Insurance staff ‘stressed’ over weight of EU regulation
- Chip shop worker jailed for £248,000 fraud
- Aviva transfers 1.39m policies to post-Brexit Irish business
Back to Top