Trade bodies split over attacks on UK banks

TRADE bodies representing small businesses have split ranks over claims that bitter political rhetoric against banks is deterring foreign financial institutions from entering the British market.

The Forum of Private Business (FPB) disagreed with the Federation of Small Business at the weekend when it backed claims by Richard Lambert, the outgoing director-general of the CBI, that attacks against UK bank bonuses and "casino" trading activities were damaging.

Lambert said he knew of one unnamed foreign bank that had pulled potential plans to buy British banking assets because of the febrile climate.

The FSB had lambasted the CBI's comments as "over- sensitive". It said the high-profile attacks on the banking industry had helped to force the setting up of the Independent Banking Commission that might yet help free up lending to small and medium-sized businesses.

But Jim Gorie, the Scottish adviser to the FPB, representing about 500 small businesses in Scotland and 20,000 in the UK with turnover up to 1 million, told The Scotsman: "We would go along with what Lambert said. The back-biting has to stop, particularly if we are to re-establish the Scottish banking image. This will not be done by continued breast-beating about the UK banks."

Gorie, a former promotions director at the Scottish Development Agency, said: "Our view at the Forum of Private Business is that the partial break-up of Lloyds and Royal Bank of Scotland will help lending to small businesses."

By contrast, he said the FPB believed political short-termism in attacks on the banks "impresses the electorate but creates sector instability".