Tuesday, 23 September 2008

Alex Neil and the BOS Kirk

So Alex Neil is assembling the 'banking elders' to look at a possibly alternative to the Lloyds TSB takeover of the Bank of Scotland. Yet why is the SNP back bencher so determined to look at an alternative when the HBOS chairman is convinced last week's deal was the right thing to do.

For starters one of the things he's claiming as a stength is a very strong and diverse wealth of business knowledge. I'm sure Lehman's, Merrill Lynch and Morgan Stanley can all have claimed the same as with much of the rest of the banking sector that is currently facing great uncertainty.

There are also claims from one of the supporters of Alex Neil's grand scheme, Jim Spowart founder of Intelligent Finance, that:

"We can't just sit back and watch the Bank of Scotland

"We've all enjoyed successful careers in banking, which is one of the
jewels in Scotland's crown. It is vital that we do something."

However, the BoS didn't simply disappear when it merged with Halifax and kept an identity and the same seems to be enshrined in the takeover plans by Lloyds TSB. In fact with so much uncertainty at present surely economies of scale stand a more reasonable chance of survival than small independent banks.

So what else is really motivating this decision? Looking at some of the names behind this move being called to this Kirk session meeting Spowart, Sir Angus Grossart, Sir George Mathewson and Gavin Masterton have all at some point either tacidly or directly offered support to the SNP, only Sir Peter Burt stands out of the group called Neil to meet to discuss a £6bn bid for the nation's bank.

Therefore is it fulhardiness for the sake of standing alone? Is it really a wise move to think small when the prevading tide is to conglomorate to survive? Also is now the time to put in such a counter claim when for the moment at least survival has been assured? And if the need is so great to prevent the Bank of Scotland disappearing where were Neil and his cronies in 2001 when the Bank of Scotland and Halifax merged in the first place?

An independent buy out of the Bank of Scotland no matter how experienced the hands at the tiller may be, could end up as its death knell if the Banking sector goes the way of recent airline company furtunes. Small operators there have ceased to breathe and the same may be true of the financial world. Why take the baby out of the cot and put it into the fire for any other reason that single, bloody mindedness 'hands offs it's Scottish'-ness madness?

It would well be a sad day for the Bank of Scotland if this takeover were to suceed and then fail to acheive what it claims to want to acheive. Best to put it to bed now and work with trying to maintain what can for the moment.

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