Deregulation is at the heart of financial crisis

Sep 26 2008 by Our Correspondent, Perthshire Advertiser Friday

WHAT a week for Scotland’s financial sector. The collapse of HBOS and the impending takeover by Lloyds/TSB will have enormous consequences for Scotland and for bank consumers and employees alike.

Perth, like many large population centres, has a number of these branches in our High Street and we also have a large HBOS operation within the city. We also have branches of both banks in towns such as Blairgowrie, Pitlochry and Aberfeldy. It is those who work in these establishments who now find themselves on the front line of what has loosely been termed the global financial crisis. What I suppose we have found over this recent time, is that the global has just got local and is knocking at our door.

The thing with HBOS was that this was not any ordinary bank. As the former Bank of Scotland, it is Scotland’s oldest financial institution dating from 1695. It is one of Scotland’s largest and most successful companies, and along with the Royal Bank of Scotland, the ‘bank’, as it is so often referred to, gives Scotland an unprecedented international profile in financial services. To think that this could be undermined by the ‘spivs and speculators’ is almost unimaginable.

Alex Salmond was entirely right to call it like this and if ever there was a compelling case for independence it is the case of HBOS.

HBOS wasn’t in trouble, this was no Northern Rock. The Financial Services Authority (FSA) had just given HBOS a clean bill of health. No, the bank was deliberately targeted by the short sellers, those determined to make a quick buck out of all this global instability. The FSA moved against this practice too late and it was too late for the bank and its employees, as these ‘spivs’ had already done their worst. This Government cosying up to the city and deregulating nearly all necessary financial protection is what is at the heart of this crisis.

What we now need is for a commitment that the new combined bank will have their headquarters based in Scotland. We also have to ensure that the Bank of Scotland name is retained. Already there have been reassurances about the continuation of Bank of Scotland notes, but more has to be done to show that there is real commitment to Scotland. But most importantly is a reassurance for all those who work within these banks whether on our high streets or in operations like those at Broxden, in Perth.

This has been a bad week for Scotland’s financial sector, but there does seem to be an all-party consensus to redeem the situation. We now have to move on and ensure the best deal for Scotland.