Two contributors to your letters pages (April 17) made the claim that RBS and Lloyds TSB are Scottish banks which would have been “totally destroyed” had they not been rescued by Westminster using money “largely provided by English, Welsh and Northern Irish tax payers”.
I take issue with both of these assertions.
The Royal Bank of Scotland and Halifax Bank of Scotland both expanded to become international banks (in the case of RBS, one of the largest in the world) as a result of the economic policy of Westminster governments and their failure to introduce adequate banking regulations. HBOS has since been bought over by Lloyds banking group and RBS, while nominally a Scottish bank, is actually headquartered at 250 Bishopgate, London.
There is an established procedure for the bailout of banks operating across national boundaries which can be seen, for example, in the case of the Belgian financial crisis of 2008. The Belgian, French and Netherlands governments worked together to bail out cross-border business of the Belgian bank Fortis and Dexia.
George Walker, professor in international financial law at Queen Mary University in London, made the following comments about the UK bank bailout arrangements on Radio Scotland’s Newsweek programme in July 2011: “There is a European Union memorandum of understanding on cross-border financial stability of June 2008 which does set out procedures for managing cross-border crisis within the EU.
“In this particular case that we’re discussing, it would presumably then have to be calculated having regard to where the various subsidiaries and business operations of RBS and HBOS were located in England and Wales and Northern Ireland, with Edinburgh only then assuming a proportionate share of around, possibly, only five per cent of the total costs concerned.”
Speaking on the same programme, Andrew Hughes-Hallett, professor of economics at St Andrews University, explained that “by international convention, when banks which operate in more than one country get into these sorts of conditions, the bailout is shared in proportion to the area of activities of those banks, and therefore it’s shared between several countries.”
An international example can be found in the actions of the US Federal Reserve which bailed out RBS to the tune of $84.5billion in order to provide liquidity to American clients caught up in the global banking crisis of 2007-08.
Banking is just one strand of the globalised economy in which all developed countries are operating in today. The concept of economic independence in the modern world is really one of interdependence.
In contrast, the political independence on offer to Scots this September can bring us the power to build a national identity based on a different social policy from that of Westminster.
The eminent economist, Professor John Kay, told Newsnight Scotland last month: “Basically, I think the vote in September ought not to be primarily about the economic issues. The practical reality is that it’s not going to make a very large difference either way.
“I think people should vote with their hearts and their views about the nature of the identity and country they want to have.”