This report in the Financial Times by Sharlene Goff draws the readers’ attention to two separate issues. One is historic and the other current. The article reports Sir Nicholas Macpherson urging caution about the State taking a greater role in banking than it already has. This raises the current question of a Government backed lending bank which merits further debate. Extraordinary times call for a different approach and in theory, a nationalised lender could assist economic growth but it will need to have a clear set of guidelines. Firstly, in respect of the sorts of projects it can invest in – this institution will need to fill the void where other banks are not lending. Secondly, in terms of governance, it must have a proper Board structure with Independent Non-Executive Directors who have the ability to take decisions, within the guidelines, without interference from Government.
The report goes on to discuss the historic decision to sell Northern Rock to Virgin Money and the timing of the deal. Hindsight is a wonderful thing and whether a better deal could have been struck for taxpayers, we will never know. What we do know is that it has helped, in Virgin Money, to allow the rapid development of a new challenger in the UK retail banking market and this can only be a good thing.
You can read the full article by clicking here.