Nationalisation is no solution for RBS

By DAILY MAIL COMMENT

Published: | Updated:

With the taxpayer already facing a £26billion loss on its 82 per cent stake in RBS, and the bank losing a worrying £1.5billion in the last six months alone, pouring even more public money into this disaster-prone institution would surely be an act of madness.

Yet according to reports yesterday, this is precisely what ‘senior government figures’ – widely believed to be leading Lib Dems including Business Secretary Vince Cable – are proposing.

It seems they want to nationalise the bank by buying up the remaining 18 per cent at a cost of £5 billion.

Vince Cable

According to reports yesterday, 'senior government figures' want to pour more money into RBS

They claim this would enable the Government to force RBS to increase lending to small firms without needing the consent of minority shareholders.

Yes, the behaviour  of many of the West’s banks over the past ten years has been an utter disgrace. But if the 1970s taught us anything, it’s that nationalisation doesn’t work. Without the discipline of the market and the need to make a profit, nationalised companies become complacent and massively inefficient.

And who would run this bank? Whitehall? A new quango? Aren’t both alternatives equally absurd?

RBS was brought down by the greed and recklessness of its boss Fred Goodwin and his cohorts. The Labour Government bailed it out because its collapse could have caused the banking system to crash.

Loss: The taxpayer is already facing a £26billion loss on its 82 per cent stake in RBS

Loss: The taxpayer is already facing a £26billion loss on its 82 per cent stake in RBS

The sooner RBS can be broken up and sold for a sensible price, the better.

Mr Cable and his Lib Dem allies would do better to spend their energy supporting Labour in its demand for a major inquiry into the behaviour and morality of the banks in recent years, then introduce legislation that can prevent  the debacle of 2008 ever happening again.

Mr Cable is right that we need to stimulate growth by getting the banks to lend to small business, but nationalisation is not the way. It would literally be throwing good money after bad.

 

Return to rigour

 
   

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