Banking future

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It was intriguing to note Brian Quinn’s comment that if a Scottish bank required to be bailed out there would be a potential “dispute” over who should undertake this, be it Scotland or the rest of the UK (Perspective, 29 August).

Unionists have used the banking collapse to trash the prospect of an independent Scotland many times before.

However, by international convention, when banks which operate in more than one country get into such difficulties, the bailout is shared in proportion to the area of activities of those banks. There would, therefore, not be a cause for the “dispute” referred to by Mr Quinn.

In the case of the collapse of the Royal Bank of Scotland, for example, about 90 per cent of its operations are in England and 10 per cent are in Scotland.

The US Federal Reserve also stepped in to bail out US operations linked to RBS and HBOS. In Europe, the governments of France, Belgium, the Netherlands and Luxembourg joined forces to help the Fortis and Dexia banks operating across their borders.

If an English-based bank operating into Scotland were to get into difficulty, the Scottish Government would ­assist in bailing out its operations, as the impact of its failure would be felt north of the ­Border as well. Being in a stronger financial position, with oil reserves valued at £1 trillion, Scotland would indeed probably find it easier to negotiate a better deal through the international money markets than the rest of the United Kingdom would.

For the rest of the UK to refuse to assist in the bailout of a Scottish-based bank, resulting in a damaging impact felt by those in the rest of the UK, is nonsensical.

Alex Orr

Edinburgh

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