Banking reform

Increasing competition in the banking market place is one of the most important measures we can take to truly kick-start our economy and protect ourselves from episodic repeats of past mistakes. It was therefore pleasing that, during the same week the Office of Fair Trading (OFT) has passed its completion concerns in SME banking to the Competition Markets Authority, the Scottish Economy Committee supports decisive action to break up RBS and the Bank of Scotland to reinvigorate banking market dynamics north of the Border.

Is this such a stretch of the imagination? We already have Project Verde and Project Rainbow, aka the split-off of TSB and Williams and Glyn, under way within Lloyds and RBS.

Why not put them on steroids and make sure they take sufficient market share of business banking? This work is already well under way and then there is Coutts, which operates more independently than other parts of the RBS Group and has suffered less reputational damage so could be sold separately.

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The investment bank has been ring-fenced, and subsequently electrified, but I see no convincing argument as to why it should remain linked to a commercial/retail bank at all.

If we were to sell these parts of the bank, the sale proceeds could be used to recapitalise the other parts of the bank we truly care about and the investment bankers would be free of the constraints of being part of the wider group.

The answer is there and it would not be too great a leap of faith to make it happen. It just needs someone with the political strength and conviction to do it.

Lawrence Tomlinson

Author of the Tomlinson Report

Isabella Road