Fears for the Future: Where we’re headed – is it all bad?*

As government stakes are sold, it’s likely that external ownership of UK banks will increase. IAN WILLIAMS wonders if that’s necessarily something to be feared.

The recession – and particularly its effect on Scotland and its Celtic neighbours in Iceland and Ireland – has given many of us pause to ruminate on where we now fit in the bigger realm. Does it matter any more that the Scottish power base of some of our leading banks has all but gone?

I was asked by a client recently how he should respond to a front-line banker who had promised an extension to unsecured lending, on similar terms to previous short-term requests, but came back within 72 hours with the contrary message that full heritable security had to be offered or no deal.

My response was that he should challenge the decision: this was a try-on to grab security, in the full knowledge that other banks would line up to take on this case. The front-line troops went back to HQ, but the answer was still “No”. The decision was taken anonymously somewhere in England: security or no deal. Period. A very unhappy client is now uncomfortable about his future expansion and expectations of what his bank will do for him.

The banking landscape is different and, in most cases, likely to remain so. In this Brave New World, Scotland is just another English region. The luxuries we’ve enjoyed – a small financial community more often than not headquartered in Scotland meant you were never far from God! – those benefits are gone, perhaps, forever.

Decisions used to be taken locally by people who knew the economy and the needs of their customers. English accountants haven’t had access to such short routes to power since the mid-1980s; but, for us, it’s a sea-change which I fear is irreversible.

The election campaign chat has been about the banks in which the government has a high level of investment being sold as soon as possible to realise the cash. How much further will that erode domestic influence? Will the new foreign masters – in all probability they will be non-UK owners – be more user friendly?

Like it or not, we must understand how they work and what we must do to help our clients through a new era of possibly more difficult and stringent assessment criteria even as we see the possible downgrading of professional offices with more of our talented people being pushed towards London and the bigger deals.

But should we fear external ownership? One of ‘our’ banks has been under Australian ownership for many years and has fared pretty well throughout the recent economic turbulence. So it’s conceivable that external ownership might be better than what we had anticipated.
I hope that collectively we try to influence the new agenda beyond just profit, and reshape the new banking environment so that we focus positively not just on domestic but on global opportunities, too. We do need to be there.

It is often said that “the world has become a smaller place”; however, for business, wherever it’s based, in the new banking environment, maybe the world is actually destined to be a much bigger – and not necessarily a more anonymous place.

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Campbell Dallas LLP is a leading independent firmof Chartered Accountants in Scotland. The firm is the Scottish associate of UHY International. For more information or advice please contact IanWilliams on 01738 441 888 or email Ian.Williams@campbelldallas.co.uk
Offices: Aberdeen | Bearsden | Paisley | Perth | Stirling www.campbelldallas.co.uk

IAN WILLIAMS is the Chairman of Campbell Dallas LLP

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