"It was the best of times it was the worst of times" A Tale of Two Cities
One of the ideas debated with the audience at the recent book launch of ‘Between two crashes' by Mark Field, MP, was the inability of the banks to supply much needed loans to SMEs.
The business bank which was so trumpeted by Vince Cable and to a slightly lesser
extent the government, which required central government intervention into the
banking loans business, has proven slow and cumbersome in making the major
impact that is needed.
An idea that was discussed was: Is the government missing the opportunity that major ownership in RBS offers? RBS has in the past and is still, the largest supplier of loans to the SME market and has established channels and relationships that could be used
to funnel loans quickly to where they are needed most. Now this does smack of the type of thing a nationalised bank would do, all be it by a government that primarily is against such ownership structures, but desperate times call for desperate measures and
in RBS the government has an enormous banking asset that should be used to the full.
Utilisation of RBS by the government, to provide much needed loans into the SME market would have the added benefit of accelerating the time factor for the bank in regaining a strong financial health and the day to which it can be returned to the private sector.
The government could establish enterprise schemes, which could utilise RBS's facilities and channels, possibly even making use of RBS's business selection and valuation services to identify SMEs with the best future prospects.
Although, the immediate future for RBS looks very good, with encouraging recent financial results and it appears to finally have the right management in situ. It might not be the right time to put RBS back into private hands, as the next few years could see
the share price rise, along with dividends. This would provide the tax payer with a profitable return on their investment.
Personally, I was never an advocate of state bailout of the banks, but accept that it was necessary at the time and in that same spirit, perhaps the increased use of RBS as a state asset is what is called for now to help kick start economic recovery.
We are in uncharted waters and strange times call for strange decisions that may go against the norm but if they work, then why not? Are we afraid to try something new, even if the situation demands such decision making and actions? However, I won't hold my
breath that the politicians are capable of some out-of- the-box thinking. Do they have the desire to do what's best for the country even if it costs them votes at the next election or goes against party policy?