EX-RBS CHIEF DOWNPLAYS SCOTS' RESPONSIBILITY

Dec 15, 2010 3:35:57 PM


By Mark McLaughlin, Political Reporter, Press Association Scotland


English taxpayers would still be overwhelmingly responsible for bailing out RBS if it was headquartered in an independent Scotland, the bank's former chairman told MSPs today.


The notion that The Royal Bank of Scotland (RBS) is a wholly Scottish bank and would become the sole responsibility of Scottish taxpayers under independence is "delusional" according to Sir George Mathewson, the man who steered the bank to global prominence as chairman in the 1990s.


England would have stumped up about £19 billion against Scotland's £1 billion if Scotland had been independent at the time of the UK banking bailout in 2008, Sir George told MSPs at Holyrood's Economy Committee today.


Sir George insisted that because about 96% of the bank's UK business is done south of the border, England would be more exposed to the systemic failures caused by any future banking crisis and should shoulder the majority of the burden for bailing the bank out.


Sir George, who was giving evidence in his capacity as chair of Alex Salmond's Council of Economic Advisers, said: "What would happen is that the investment requirement would be negotiated between the two jurisdictions, and would probably be something like 4% to Scottish
taxpayers and 96% to English taxpayers.


"It would be based on market share, although this is a difficult concept. It's a question of deciding whether to judge it on asset size, or retail base, or the deals that are done in London or elsewhere."

Scotland's perceived inability to bail out its banks is a frequent line of attack from Holyrood's unionist parties in their opposition to the SNP's desire for full control over Scotland's finances.


However, the SNP-supporting economic adviser rejected the suggestion by Labour enterprise spokesman Lewis Macdonald that this process of "horse trading" would be protracted, and ultimately damaging to Scotland's economy if more urgent economic intervention is needed.

Mr Macdonald said: "It sounds to me more like fiscal irresponsibility to say that we'll leave the responsibility for dealing with the macro-economy with the UK Government while we take responsibilities for the tax revenues."


Mr Macdonald further suggested that the idea that RBS was a Scottish institution was "simply delusional", a statement Sir George emphatically agreed with.

Sir George said: "It has a long history of being a Scottish-based institution.

"It has value because of the fact that a disproportional amount of staff are in Scotland compared to the UK as a whole, but it is owned globally, it functions globally now, and I think characterising any institution by where the head office is located is, at best, misleading.

"The important thing to understand from these discussions is that where the head office is located, or where the ownership is concerned, is not the issue. It is where the business is being done, and where the systemic problems will arise, that is the issue here."


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