BANKING PROBLEMS
Article for The Sunday Express, 23rd July 2023
Economic growth, an increase in living standards and prosperity are all dependent on effective banking. In 2008 the banks were bailed out by the taxpayer after they made terrible mistakes, because they were too big to fail.
Then one of the most irresponsible banks was the Royal Bank of Scotland, now rebranded as NatWest. It had taken catastrophic risks and had to be taken into state ownership.
NatWest under Fred Goodwin had forgotten the essentials of banking. It took high risks on short term money and failed to match its assets and liabilities. It was both greedy and stupid. The assumption was that under its next generations of leaders it would return to normal banking standards and would focus on its straightforward business.
Banking is not complicated – you take in deposits from Customer A to lend to Customer B and charge more for a loan than you pay for a deposit. Its moral complexity has historically been about usury, not about clients’ views.
Yet as Fred Goodwin decided that simple banking practice was not exciting enough, so Dame Alison Rose wants NatWest to concentrate on politics rather than business. She has explained her focus on “diversity, equity and inclusion”, and to burnish her green credentials NatWest has stopped lending to the oil and gas sector.
Diversity and inclusion are the buzzwords of the virtue-signalling formalised by Dame Alison via the committee that excluded Nigel Farage from NatWest-owned private bank Coutts.
This has been consequential enough but “equity” is a more sinister term. It seeks not equality of opportunity but of outcome and is often connected with discrimination under the guise of “affirmative action”. It is an entirely political term, not one associated with making profits.
The hostility to legal businesses is also shown by the decision not to lend to oil and gas companies. This has consequences. UK gas prices last year were, on average, five times those of the US because of a lack of investment and a failure to exploit domestic assets. A failure in which banks are partially but not exclusively culpable.
Good banks stick to the fundamentals of banking, but this seems to be too boring for many bankers. The taxpayer bailed out the greedy banks in 2008 and still owns 38 per cent of NatWest. It now sees it being run not for financial gain, but to show the woke credentials of its chief executive.
A slightly half-hearted apology to Nigel may be a grudging start. However, a return to proper banking is what is really needed. Unfortunately, this may be difficult because once good business practice is replaced by posturing so the propriety of banking gets forgotten. The greatest shame of NatWest is in briefing that Nigel Farage’s account was closed down because he was not rich enough.
First of all this has been shown to be untrue and banks ought not to lie. Secondly, confidentiality is at the heart of banking. Everyone, including politicians, is entitled to a private relationship with a bank. This indiscretion, in a foolish effort to win a cheap public relations point, is unforgivable and the finger of suspicion points at the chief executive herself.
She will have to resign if she really is the one who briefed the BBC.
