Tennant calls for UK banks' critics to hold fire over crisis

Published on Monday 24 August 2009 21:35

MARK Tennant, the incoming chairman of industry body Scottish Financial Enterprise, yesterday called for a ceasefire by critics of the major UK banks.

Although he did not defend "fatal" mistakes – such as the takeover of ABN Amro by Royal Bank of Scotland which caused one of the world's biggest banks to be bailed out by the tax payer – he called for politicians, media and regulators to help nationalised banks "find their way forward" and bring banking "back to its roots".

Speaking for the first time since his appointment, he said: "We should stop shooting the banks – the mistakes have been made, the corpses have been buried. We now have to find a way of going forward and bring the banks back to their roots which is lending to small companies, generating wealth and becoming a channel for money around the country and around the world. That is their job. We have to help them do it now, not continually shoot them."

Although he admitted Scotland's reputation was "obviously damaged", Tennant blasted as "arrant nonsense" recent commentators that have argued Edinburgh's standing as a financial services centre lies in ruins.

He said: "The most important thing is to ensure we get back Scotland's reputation. That is critical. I don't think Edinburgh is holed below the water line, nor indeed is Scotland. I think that is rubbish, arrant nonsense."

Tennant argued that the industry would have to "look beyond" the troubles in the banking sector, and instead look at "thriving" businesses in fund management, the life and pensions sector, and "fastest growing" asset servicing industry.

Tennant, who established asset servicing operations for Chase Manhattan Bank in Edinburgh in the early 1990s, said this industry could become a major source of growth for the Scottish financial services industry.

He said Edinburgh in particular, where State Street and Citibank already have asset servicing operations, was in a strong position to grow in this area as new European rules on cross-border sales of funds take effect.

He said the capital was third in Europe for asset servicing, behind Dublin in Luxembourg but there was "no reason" why Edinburgh can't improve.

"Dublin is short of people and very expensive, Luxembourg is hugely expensive. We have a terrific pool of talent and an asset serving pool just as good," said Tennant.

In a divergence of policy for SFE, Tennant also called for more involvement for the financial services sector in supporting the SME economy. Admitting the issue has long been a personal preoccupation, he argued banks and venture capitalists had a role to play in supporting the growth of small Scottish businesses – branding the UK's track record in supporting small businesses compared to the US as "pathetic".

"In Scotland, far too many companies fall by the wayside far too early on. If we could halve the number of small companies that fell over we would hugely increase employment prospects in Scotland," he said.

"There is something not right here. Our ability to have small companies succeed compared with America – in the UK generally it is pretty pathetic but in Scotland it is not good either.

He added: "If we could find a way of harnessing the venture capital and banking businesses to deal with that single problem we would enhance the employment prospects of everyone in Scotland.

"It is government, banks and the financial services industry working in partnership for the good of what we are all here to serve, which is the ordinary person in the street. There is no point to us being here if we don't serve them," said Tennant.

Tennant also said the Scottish financial services industry was behind its counterparts in the US in promoting links with universities and said his members should sponsor degrees and fellowships.

He said he wants to see the Bank of Scotland "preserved" if Lloyds is forced to sell off any UK retail banking operations.