Demerged Bank of Scotland could get back to basics
I WENT TO A RECEPTION at the Bank of Scotland building at the top of The Mound recently. I hadn't been there for a while, and was surprised to see what had at one time been the busy headquarters, and my bank 'branch' - a beautiful big traditional banking hall with desks and counters - had now been transformed into a sterile room, empty and painted all in white.
It seemed an appropriate metaphor for what was once a proud brand. Because, of course, the Bank of Scotland doesn't really exist any more. This is now the Scottish headquarters of Lloyds Banking Group, and 300 years of Scottish banking history has been swept away.
A few months ago I had popped into what is now the replacement flagship branch of BoS a few yards away. I wanted to open a new business banking account and asked one of the uniformed assistants. "och, we dinnae dae that noo," she said. "There's a leaflet somewhere" and went off to find a small brochure which told me how to remotely apply to open a business account.
Over the next few days I attempted to do just that, first online, and then by call centre, before abandoning the whole frustrating project and opening my account with another bank.
It seems so very sad. only five years ago Bank of Scotland was the place to go for banking services for young ambitious companies. In those days there was a department, the 'Emerging Business Unit', with around a dozen bankers dedicated to supporting such companies; they specialised in servicing the needs of high-growth businesses. It seemed to me this was a smart move - after all, they were recruiting all the significant new companies in Scotland as customers.
Rather naively, I thought this was what banks were for; to service the banking needs of companies and individuals mostly in Scotland, the economy in which they were based. However HBoS decided this was no longer the kind of business they wanted to pursue and the unit was wound up.
They had bigger fish to fry elsewhere, such as a string of deals to fund casino projects in Las Vegas where clearly they had little local expertise; among those was an agreement to lend $700m to the M Resort Spa Casino in Las Vegas. This casino, miles away from 'the strip', has since failed and HBoS has lost over $500m extracting itself from the deal.
And now we learn of the exposure of the Scottish banks to the financial 'black hole' in Ireland where HBoS has amassed £27bn of Irish debts. Lloyds is now getting out - it is set to hand back its Republic of Ireland banking licence as it closes down the Bank of Scotland (Ireland), and its 44 Halifax branches.
But is the 'super'-bank comprising Bank of Scotland, Halifax and Lloyds TSB set in stone? Comments from Claire Spottiswoode and Sir John Vickers, both members of the Government's banking commission, indicate they believe Lloyds' takeover of HBoS may have been 'a mistake'.
It would take some doing to break them up again; 22,000 jobs have been cut and the systems of the two banks have been substantially integrated. The management structure in Bank of Scotland has been largely demolished.
So would it be possible to demerge Bank of Scotland once again as an independent Scottish bank, servicing the needs of our businesses and individuals?
It would surely be worth a try.