Wednesday 14 July 2010

A Saver's Dilemma

John Swinney, Scotland's Finance Secretary, has announced Scotland will soon see major new players enter its banking market.

He believes a whole range of new names will emerge as the European Union forces the existing banks to sell off assets as a result of their multi-billion-pound government bailouts 18 months ago.

"I think that is a good thing. It will mean greater competition propositions are available in the market".

Scotland has already gained new entrants into the market, including Tesco. Mr Swinney stressed such new players were already recruiting some of the workers to be laid off by the two big traditional state-owned banks, Lloyds Bank of Scotland division and the Royal Bank of Scotland.

Business groups are eager to see more banks and John Swinney has warned that low bank lending is putting Scotland's economic recovery at risk. One in three businesses that applies for credit is turned down and the Institute of Directors found its members were still struggling to access finance in the first half of this year - with many of those who tried to borrow finding they were expected to put up personal security.

RBS's chairman for business lending, admitted his managers were tougher with firms, insisting on going over their books, but also insisted the main reason his bank's loan book was 'broadly flat' was that businesses were not investing.

I'm not a banker but I've been in charge of my own finances since adulthood. In this whole report there is no mention of the individual saver. They're the people who create the cash flow for banks to lend - along with business who operate in profit - yet still they receive a pittance in interest on their savings. Banks currently offer us small savers no encouragement to save with them so why do we? Because we have little choice if we don't want to store our money under the floorboards or invest it in risky shares.

Having smaller branches of the multiples will do little for the average saver so I trust John Swinney is looking into reintroducing the type of bank which made Scotland a safe and trustworthy place to place your money - such as the Aidrie Savings Bank - and are able to realise that modern financial practice is not necessarily the best. There's no shame in returning to a banking system which worked and was well respected. Savers deserve better than what is offered today.


fourmenterian said...

Funny old world-before the Financial Services Act 1986 there was a whole universe of building societies small medium and large competing for savings and lending out some of what was saved. Then the 'Big Bang' came along to keep British lenders 'competitive' on the world stage- what a load of hooey that turned out to be as boring old Halifax transmogrified itself into HBOS and within a short few years 'the world's biggest building society' all but went belly-up. You're right, it is time to get back to the basics of banking and stop listening to bankers' bullshit.

Joe Public said...

".......the European Union forces the existing banks to sell off assets as a result of their multi-billion-pound government bailouts 18 months ago."


"....low bank lending is putting Scotland's economic recovery at risk."

So, the banks made disastrous lending decisions and then needed to be bailed out. Now, someone with alleged Financial savvy is complaining because they're not lending enough.

Am I the only person puzzled?

subrosa said...

Hello fourmenterian, excellent summary.

I'd be the first in the queue if what is now called the 'old-fashioned' style of bank opened locally.

subrosa said...

I am too Joe. There's just no end to what these chancers are getting away with today.

Mrs Rigby said...

You're absolutely right. They're all so busy making 'corporate' decisions, to protect their jobs and their businesses, without seeming to realise that it's a money-go-round that starts off with the smallest investor.

And we could quite happily pull the plug on the whole thing by withdrawing our savings.

subrosa said...

Personally Mrs R I'm all for that. Too many people these days know far too much about my finances and people who I feel should not have access to such detail.

I'd happily remove my tiny bit. It hasn't received enough interest in the past year to even pay for a haircut.

Anonymous said...


Savings banks are the right thing for people with just a few extra pounds to put away and absolutely no desire to risk them on gambles.

We live in a world where we must all have bank accounts whether or not we like them. We simply cannot operate without them. The repeal of the Truck Acts saw to that.

And as with every other kind of service there are customers of all (financial) shapes and sizes. We all have different needs. There was, it seems to me, even before the banking crash, a responsibility on banks (and it they will not meet that responsibility, upon the government, to ensure that they do) to provide the sort of service that is suitable for all.

If they cannot do that, then we need to look again at the insistence of almost every company to pay salaries by BACS, and the demands that we pay every bill by DD or SO...

A savings bank, in every area... not the same one... with local management reacting to local needs... and not allowed to get bigger than the area.... no branches in Singapore!!!... is just what we need.

subrosa said...

You've been reading my mind again Tris. :)

Anonymous said...

Ohhhhhh nooooooooo SR. I would never do that... and if I did read your mind, I wouldn't post about it.... and if I did post about it, you wouldn't print it!


subrosa said...

You got that right Tris, you wouldn't post it, well maybe only once... ;)

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