Cable slams practices of bailed out banks
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Liberal Democrats Shadow Chancellor Vince Cable has slammed the Government for allowing taxpayer-funded banks to finance international takeovers.
Speaking at a Thomson Reuters event today, Cable said banks such as RBS and Lloyds are key to supporting the British economy and should be forced to lend to UK-based businesses rather than global customers.
He said: “UK banks are guaranteed by the British taxpayer or have been bailed out by the British Government.
“Yet several, notably RBS, see themselves as global banks catering to global clients. This divergence of interests came to the fore in the Kraft takeover of Cadbury which RBS helped to finance.
“In principle there is nothing wrong with takeovers, nor with foreign ownership. But as a UK nationalised bank RBS has a primary duty to us, the British taxpayer. We are the shareholders.
“It is difficult to see how UK PLC was being served by the financing of the Kraft takeover, let alone supporting dodgy Russian oligarchs. Billions of pounds of taxpayers’ money was ploughed into RBS in particular to support British business, not attack it.”
Cable said that his first objective as Chancellor would be to set a mandate for these banks to lend to viable British businesses.
He said: “Now that UKFI has finally acknowledged that the semi-nationalised banks will be in public ownership for at least five years, it is time to drop the pretence that a rapid return to private ownership requires a pumping up of the share price on the back of conservative reserve requirements and business lending practices.
“What is needed is a fresh and consistent mandate for those banks and this would be my day one, hour one objective as Chancellor. I would insist that the banks support recovery by ensuring that viable businesses are not starved of capital.
“The lending agreements have to be more concrete, long term and better policed. These banks can be tools of government policy securing and maintaining capital to good, solvent small and medium sized businesses that are vital to our economic recovery.
“Put simply: RBS and Lloyds are key to supporting the British economy.”
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Readers' comments (1)
Dale Tranter | 23 Feb 2010 12:55 pm
For once, he's wrong. Foreign takeovers of UK companies aren't going to stop just because a UK bank doesn't lend them the money to do it. If RBS hadn't done so, some foreign bank would have made money out of the deal instead.
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