Arguments surface in two capitals over leaders' reaction to takeover

Published on Thursday 18 September 2008 22:19

IN POLITICAL terms, the aftermath of the takeover of HBOS was very much a tale of two cities.

In Edinburgh, Alex Salmond twice hailed the unity of the Scottish Parliament as all parties came together in the common cause of defending Scottish jobs and interest.

In London, however, Gordon Brown was under pressure from both sides of the Border for his role in brokering the takeover.

While the Prime Minister had hoped his intervention would be seen as a positive move, in England he was accused of intervening to protect jobs in his own part of the country, while in Scotland he was painted as having aided the death of a national institution.

Meanwhile, in Scotland, following the rare display of unity at First Minister's questions yesterday, party politics began to bubble to the surface.

A source close to the First Minister argued that, given the speedy way the European Central Bank intervened to pump money into the system, Scotland would have been better off under a European regime than under the UK government.

This was derided, though, by Andy Kerr, Labour's finance spokesman. He said: "Here we have a Scottish institution taken over by a UK institution.

"We have the ability to argue for the retention of headquarters' functions and for Scottish business because we are part of the UK."

He added: "If Scotland was independent, this would be a takeover by another foreign bank. We would have little leeway in arguing against it."

"They couldn't have done anything in an independent Scotland to prevent this."

There was also a dispute over the First Minister's interpretation of the takeover, in which he portrayed HBOS as an exemplary financial institution that was preyed on by unscrupulous speculators.

A source close to Alistair Darling, the Chancellor, described this version of events as "complete nonsense", claiming that HBOS had become vulnerable because of the way it had used the money markets to finance mortgages.

The source said HBOS had been struggling and the Lloyds TSB takeover was the best possible option.

The alternative would have been a ruinous run on the bank.

Mr Brown's spokesman said: "The Prime Minister did not lobby on issues of jobs relating to any part of the UK. These are decisions taken by Lloyds."