Future banking

Published on 20/12/2012 00:00

It was intriguing to note ­Scottish Secretary Michael Moore naively comment that the Bank of England would not be the lender of last resort for an independent Scotland (your report, 19 December).

Unionist politicians have used the banking collapse to trash Scotland many times before now. However, by international convention, when banks which operate in more than one country get into these sorts of conditions, the bailout is shared in proportion to the area of activities of those banks.

In the case of the Royal Bank of Scotland, for example, roughly speaking 90 per cent of its operations are in England and 10 per cent are in Scotland. The Federal Reserve 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-headquartered 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.

Mr Moore’s damaging narrow nationalism in potentially refusing to assist the bailout of a Scottish-based bank, and thereby allowing a damaging impact to be felt by those in the rest of the UK, is quite bizarre.

Alex Orr

Edinburgh