It would be helpful to have a positive statement from the authorities about banking capital. I assume all banks currently trading have enough capital. That after all is one of the main tasks of the Regulator, to ensure they do. It appears that recently the government has required banks to have more capital, leading to the discussions over whether taxpayers should put up some of this. It would be helpful to be told by how much the government has decided to lift the capital requirement at this juncture. It is an odd time to seek to increase capital ratios with a public dialogue implying the banks do not have enough capital, when we need to increase confidence in the banking system. If individual banks are thought by the regulator to need more capital in case of future losses, that should be done in strictest confidence.
I am distrubed to hear the government use its current support for the banks as part of its political argument with the SNP. The two main recipients of taxpayer cash for capital happen to be the Royal Bank of Scotland and Halifax Bank of Scotland. We are now being told by a triumphant government that the large sums proposed for these banks show why an indepednent Scotland would not work, because such sums would be too much for Scottish taxpayers’ pockets without the help of English taxpayers. As the Glenrothes by election hoves into view we can expect more of this sabre rattling rhetoric for the Union.
It is in the national interest for the government to go back to the commercial banks in private and seek to work out how they can meet higher capital standards without recourse to taxpayers funds. This may well include telling them firmly the taxpayer will not finance a bank merger. It is not good for taxpayers that this matter is now connected by some in politics to a Scottish by election.