...or. if they bark, they do so very quietly. Scotland is fortunate (although sometimes I wonder) to host the headquarters of two of the biggest banks in the world, RBS and HBOS, who announced pre-tax profits this week of respectively £9.2 billion and £5.7 billion. There is no other company based in Scotland comes anywhere near these kind of profit figures. It is difficult to underestimate the sheer scale of these two companies compared to other Scottish companies.
Even in UK terms, RBS and HBOS qualify as behemoths. By comparison, Tesco's profits amount to little more than £2 billion. There are nevertheless some UK companies such as HSBC and BP which produce higher profits, but there is no doubt that RBS and HBOS are among the few really big league players in the UK.
So, Scotland is the home to two banking giants. But they do not seem to exert any undue influence in Scotland, good or bad. Neither of them mounts the barricades when Scottish companies are under threat from foreign competitors (eg Scottish Power and Iberdrola); neither of them seems particularly committed to stimulating economic growth in Scotland (eg by increasing the domestic business birthrate); nor do they appear to have any particular cultural or social commitment to Scotland (although I do not deny that they seem to sponsor a fair number of sports and arts events). There is of course no overt commercial reason why they should go out of their way to be altruistic.
Conversely, nor do they appear to exert (or wish to exert) any excessive influence on the Scottish Executive which is left to get on with its economic policies as best it can. They do not attract complaints from Scottish local authorities. Unlike Tesco, they are never accused of seeking to intimidate their suppliers. If last year's Farepak scandal was surprising, it is because it was so unusual. There will always be the occasional branch closure or embezzlement case, but there is surprisingly little sustained animosity (compare and contrast the utilities companies or the retail groceries sector). The worst sin that one can come up with is to suggest that they are ripping off their customers - but nobody has produced any evidence to indicate that they are worse than any other bank the world over, and arguably they are better than most.
Nor do they court publicity. There are no Bransonesque cavortings for Sir Fred Goodwin or Andy Hornby. I doubt if one in a hundred Scots knows their position and I am sure that even fewer would recognise them.
It is all very curious. Perhaps I am being naive - perhaps, beneath the surface, RBS and HBOS are pulling strings like mad to ensure their continued dominance over Scottish economic and social life. But, if the two giants are throwing their weight about, they are doing so very quietly...
1 comment:
It's nice and easy. The media see the banks' profits as an easy thing to attack hence the banks like to keep the attack surface small. Remember the megalomaniac drama at the 2005 investors' briefing?
That means minimal interference in politics (our politicians leak like a London water main, so even private briefing is bad); public briefing (except the most dispassionate) is seen as anathema. I think the closest I have seen it come is with the "If you don't let us build enough parking spaces, we'll just build our Headquarters in London" fuss over the RBS Gogarburn site regarding the Exec's "you can only have 1/3 of the parking spaces you need so people will use public transport" policy.
Clearly the banks have a significant influence on public life: if a certain sector is seen as a bad credit risk, then that sector is not going to get much support. On the other hand, both RBSG and HBOS get the odd bad publicity mention for supporting PFI. This is not the most popular of the current nu-Labour policies but, in financial terms, it is essentially risk-free (neither government is likely to actually go bankrupt, not when Gordo has his claws so tightly into everybody's wallets or purses) - and, as an up-side, if you need the capital back, there is a thriving market in the sell-on of PFI contracts.
As for economics policy - the banks spend a lot of time looking at the economics policies of the Executive, Westminster and other governments and examining what it means to their business and how to best profit (or, at least, avoid loss) from the changes in business and consumer behaviour. The RBS even publishes most of its analyses openly (the only things redacted from the public version are the internal sector specific comments like "the reduction in support this signals for the agricultural sector is likely to lead to an increase in bad debt provisions over the next 24 months.)
S-E
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