Newspaper article The Journal (Newcastle, England)

Create New Network of Regional Banks, Says MP

Newspaper article The Journal (Newcastle, England)

Create New Network of Regional Banks, Says MP

Article excerpt

Byline: Jonathan Walker Political Editor jon.walker@trinitymirror.com

GEORGE Osborne was urged to halt the sell-off of Royal Bank of Scotland and to create a network of new regional banks instead.

Easington MP Grahame Morris said the economy would benefit from new banks which supported firms creating jobs, such as manufacturers, construction businesses and shops.

But selling of Royal Bank of Scotland (RBS) would simply leave the country with another London-based bank focused on mortgages and the property market, he said.

It came as the Tynedale Community Bank was opened in Hexham.

The Government began selling shares in RBS in August, but made a PS1.1bn loss for taxpayers.

It sold a 5.4% stake in the bank and raised PS2.1bn. But this was only two thirds of the price the then Labour government paid for the shares in 2008. Thousands of people have signed a petition calling for an independent review of options for the bank's future before further shares are sold.

MPs backed a motion urging the Government to "consider suspending the further sale of its shares in the Royal Bank of Scotland whilst it looks at alternative options" including creating regional banks, but although this was approved without a vote in the Commons it is not binding on Ministers. Mr Morris said that big banks, including Royal Bank of Scotland, were still likely to make the same mistakes that led to the banking crisis.

He told the Commons: "For as long as we have a bonus culture in which bankers are financially incentivised by the prospect of receiving huge bonuses for a single deal - more than an ordinary working man or woman could accumulate in the whole of their working life - bankers will continue to take chances, to gamble ... and to mis-sell products.

"We need to change that culture fundamentally, and we now have an opportunity to do that by creating an alternative system. …

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