Will we never learn?
For those with long enough memories the current shenanigans with our Government bailing out high street banks and orchestrating mergers to create ‘national champions’ holds some depressing parallels with corporatist interventionist days of the 1960’s and 1970’s.
During the 1960’s the formation of BMC by the merger of Austin and Morris had already created a giant-sized but critically under funded car business that had too many outdated products - and the modern cars it did have (the Mini) were loss-making. Without sufficient profits BMC couldn’t finance new product development, and couldn’t modernise production, and was slowly failing.
Meanwhile a bright, young and ambitious management team was running a far smaller business called Leyland Group. They had re-invested the huge profits from their successful bus and truck sales into developing new and very profitable up-market Triumph and Rover cars like the TR6, Triumph Stag and Range Rover and sales and profits were booming.
Worried about the possibility that BMC might collapse the Labour Industry Secretary (a certain Anthony Wedgwood-Benn) forced a merger and created the monster that was British Leyland. Instead of Triumph ending up as a ‘British BMW’ success story we ended up with the actual German BMW picking over the smouldering remains of the entire UK car industry twenty years later, and only after the Government had wasted billions in ‘state aid’.
In my view there is a real possibility of the same thing happening with the latest Scottish bank mergers. We have proved time and time again that forcing or bribing a successful business to take on a lame duck behemoth backed by Government money is a formula for disaster.
Just like BL the management will never be free of Government intervention, branches and offices will have to stay open for political reasons and tough decisions will be fudged and delayed leading to enormous losses over decades ahead which you and I will have to pay for.