Banking For Scotland

“We need a banking system that is built on trust from customers which comes from banks which care about their customers.” – Common Weal Key Ideas

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Image: The National. Of course, Central Banks are a bit different from the topic of this article.

The news the closure of 1 in 4 RBS branches across Scotland is coupled with the now grimly ironic relaunch of their “Royal Bank for Scotland” advert. Once again, this bank, like others before it, is withdrawing its physical presence from many areas of the country and, as before, it cites the rise of online banking as the principal reason.

1 in 4 branches might not sound too bad to some. It might sound largely bearable. But this figure doesn’t account for regional disparities. For example, of the ten RBS branches within 25km of where I live, eight of them are now scheduled to close.

There will be places, particularly in rural Scotland, where the loss of their branch will result in the total loss of all physical banks in their community.

It is true that many people now do their day-to-day banking online but for those who don’t, this may be devastating news.

Perhaps more importantly than personal banking will be the loss of business banking services. Many small businesses require access to banks on a daily basis, particularly if they handle cash. This move, compounded with others like it past and future, may cause significant harm to the Scottish SME ecology.

Once again, the losses incurred during RBS’s casino banking glut have infected the real economy and, once again, we cannot hope to see the kind of bail-out that they were given.

Which brings up a point. RBS is more than 70% owned by the UK Government. What part have they played in these closures? Probably very little. As far as I can see, the strategy of the UK Government towards the nationalised banks has been to do absolutely nothing with them – to just let them keep doing what they would have done had they never been nationalised – and then to sell them off again.

A sensible and forward thinking government would have taken a far more proactive role in actually using its majority stake in the company. I’m not saying it would have been easy given the underlying structural issues within RBS – this is a bank which used to deliberately bankrupt small companies so that it could make a profit on seized assets – but if the UK Government had had the will to do so, it could have transformed the company into a network of local and regional banks which just solely focused on the business of providing deposits, credit and cash handling services. It could have dispensed entirely with the arcane financial shenanigans which have nearly crippled the country’s economy and could have become a very stable, very successful (if not quite so overtly profitable), “boring bank“.

Many folk will still remember how banking used to be. How you knew your bank manager and they knew better than almost anyone save yourself your business and your financial circumstances. They knew when a loan would be good for you or when it would be a burden. These things cannot be replicated via an automated helpline on a website or by an ever more complex next of “financial products” which are often more about extracting profits from you rather than supporting your business. The idea that you could become the product – to be sold and traded at the banks whim – would be utterly alien to such a system.

Of course, the UK Government isn’t going to do this. Financial gambling is just about the only thing that they have left in their economic strategy so they’re not going to say anything against it. I’m not sure if the Scottish Government has the powers to do so but it should certainly look into the possibility of setting up or encouraging the founding of a “boring bank” network – separate from but working mutually alongside the local development wings of a Scottish National Investment Bank.

Do this we’ll have a bank for Scotland. Till then, I fear that we’ll just be days or weeks or months away from another round of closures and “efficiency measures” which will be about pleasing shareholders or preparing for the next round of “investment opportunities” than it will be about actually supporting local economies and local customers.

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Lying Track

Ian Murray, Scotland’s sole Labour MP, lied to the people of Scotland today.

This morning, 14th September 2015, he was interviewed on BBC Radio Scotland’s Good Morning Scotland primarily on the extent of his agreement with his party’s political realignment in the wake of their most recent leadership changeover.

In one segment he makes the statement that the Scottish Government appeared to favour awarding the Scotrail contract to the Dutch Government owned Abelio rather than renationalising Scotland’s railways.

The relevant comment beings at 5.50.

He appears to forget that under the Railways Act 1993 enacted by the Tories and never repealed under Labour, the Scottish Government is currently barred from either renationalising the railways or forming a company in which they own a controlling stake to bid for contracts and tenders.

Indeed, under this bill any government on the planet could potentially own and operate our railways except our own.

I’m sure that rather than this being a lie, personal or political, today’s comment was merely a slip of the mind and that Mr Murray will be submitting a bill to repeal this clause in the near future.

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