Scotland 'won't lose its bank notes'

Friday, September 19, 2008

The deal made to enable Lloyds TSB to take over HBOS may be seen by some in England as a masterstroke but in Scotland many are seeing it as the end of a national institution and a threat to Scotland retaining its own bank notes, which it has had since 1695.

However, Lloyds TSB has insisted it will continue to use the HBOS headquarters in Edinburgh and carry on printing Bank of Scotland notes.

After blaming the bank’s takeover on "a short-selling bunch of spivs and speculators", a "very angry" First Minister Alex Salmond has suggested that things would have been different under a European regime than they are under the UK government.

But Labour's finance spokesman Andy Kerr disagreed, pointing out that a Scottish institution has been taken over by a UK institution. "If Scotland was independent, this would be a takeover by another foreign bank," he said. "We would have little leeway in arguing against it. They couldn't have done anything in an independent Scotland to prevent this."

Salmond has been talking with HBOS and Lloyds TSB to try to ensure the new bank is still based in Scotland. "There's going to be a huge job of advocacy in the Scottish interest," he said. "I have spoken to senior officials in both banks today and made it clear that we will be making sure these representations are made."

The Scotsman quotes ‘a source close to’ Chancellor Alistair Darling as saying that Salmond’s version of events is "complete nonsense". The fact is, the source said, HBOS had become vulnerable because of the way it had used the money markets to finance mortgages and the Lloyds TSB takeover was the best possible option. The alternative would have been "a ruinous run on the bank".