The Bank of the Scotland is the latest victim to fall prey to the global credit crunch
It’s the credit crunch that just keeps on crunching. Latest victim – the Bank of Scotland, established in 1695, and the institution that invented banking as we know it in a Western sense.
Got an overdraft? You can thank the Bank of Scotland for that innovation and plenty more. The bank, known as HBOS after its merger with English bank Halifax, is the biggest home lender in the UK. And now, merged with Lloyds TSB, it will become even bigger.
But at what cost, and why? The cost to Scotland at this stage is unknown, though it’s inconceivable that no jobs will be lost. Some say with a Scottish Prime Minister and a Scottish Chancellor, pressure will be brought to bear on Lloyds to ensure there are not major cuts north of the Border.
But Gordon Brown and his government are dead in the water and have no leverage. Lloyds would do better to tell them where to go and keep in sweet with the Conservatives who will most likely be in government for a decade after the next election. It doesn’t look good for Scottish employees of HBOS, from the tellers in a branch nervously looking at the Lloyds outlet down the street, to the senior execs wondering just how in demand their so-called strategic vision will be in the new entity.
And what about First Minister Alex Salmond? The news is mixed for his Nationalists. On one hand it does help him tactically in that the Conservative government that will inevitably come in after the next election will be focused on a Middle England suffering severe recessionary pain, thus proving to Scots that they can some times become second class citizens in their own country when London.
But on the other hand, the Nationalists have long pointed to Scotland’s thriving financial services sector as a driver of growth in an independent country. Now that sector is no longer thriving, how, many Scots will ask, will an independent country fund itself?
Salmond also gained plenty of column inches when he described short sellers – who he blamed for driving HBOS to the wall – as “spivs and scoundrels”. But were the short sellers really to blame? Some indications show that shorters were responsible for less than 5 per cent of the trades on HBOS shares on the day the old lady died. Perhaps its easier for Salmond to pin the blame on a conveniently nameless small bunch of evil plotters rather than face up to the fact that years of mismanagement, by people including one man he’s appointed to his own financial advice council, left the company in a terribly vulnerable position.