S4M-05153 Clydesdale Bank Job Losses

The Deputy Presiding Officer (John Scott): The next item of business is a members’ business debate on motion S4M-05153, in the name of Drew Smith, on job losses at the Clydesdale bank. The debate will be concluded without any question being put.

Motion debated,

That the Parliament notes with disappointment the announcement by National Australia Group that over 200 people in Scotland will lose their jobs at Clydesdale Bank sites across Scotland, including in the Glasgow region; understands that this brings the total number of jobs lost to 400 since 2011; regrets that, as part of the strategic review outcome for the Clydesdale and Yorkshire banks, four financial solution centres will close in Scotland, in Paisley, Bearsden, Dunfermline and Inverurie; believes that this will have a negative impact on staff and their families who are affected by the closure, and regrets the loss of developed skills at sites across Scotland.

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Stewart Stevenson (Banffshire and Buchan Coast) (SNP):

As other members have done, I thank Drew Smith for giving us the opportunity to discuss the issue in Parliament. For the avoidance of doubt, as I will be talking about banking generally, I declare that—regretfully—I continue to have a shareholding in Lloyds Banking Group.

In what has happened in the banking industry, a matter of great regret is the great division between the rewards that there appear to have been for failure at the top of too many banking organisations and the price that has been paid and the hardship that has been experienced by those front-line staff who have not had the luxury of heavily gold-plated pensions and large pay-offs. At Christmas in particular, our thoughts are with those front-line staff and their families.

The broad causes of the banking difficulty have been well discussed, but a couple of the causes of the causes are worthy of a bit of examination. One of those relates to the interaction between investment banking and clearing banking. In the aftermath of the last crash in the 1930s, the Democrats Carter Glass and Henry Steagall introduced legislation that required separation between investment banking and clearing banking. Section 20 of the Banking Act 1933—the Glass-Steagall act—prohibited any bank in the Federal Reserve system from being involved in

“the issue, flotation, underwriting, public sale, or distribution”

of securities. That was a successful innovation that protected the clearing bank system across the world for many generations of bankers and bank customers.

The Glass-Steagall act also put a geographic limit on the operation of United States banks: they could operate only in a single state. That did not work so well. Bank of America, which was based in California, simply went international; Citibank, which was based in New York, did the same. Some of the measures in the act worked and some of them did not work.

In the mid-1930s there was an attempt to overturn some of the Glass-Steagall act’s provisions, but President Roosevelt said that the old abuses would come back if underwriting were restored in any shape, manner or form in the clearing bank system. We are here today because that is precisely what happened, first in the US in the 1960s, when the Glass-Steagall act began to be interpreted in a different way and barriers started to be broken down, and then in the 1980s, when Margaret Thatcher’s Government did the same here. That is one of the causes of the causes.

The other cause of the cause is contemporary and is to do with qualifications. Front-line staff are encouraged to study in their spare time and many achieve a qualification from the Chartered Institute of Bankers in Scotland that is at least equivalent to a first degree and, in my view, much harder to achieve than a first degree, given that people have to study in their spare time.

Such qualifications are regarded as necessary for front-line staff, but banking qualifications and the experience that goes with them have been notably absent from the ranks of senior management in the Royal Bank of Scotland, the Bank of Scotland and, to a lesser extent, the Clydesdale Bank. When RBS and the Bank of Scotland got into difficulties, only a single senior manager in each bank had any banking qualification of any kind. We need front-line staff to be qualified and yet somehow we have a system that allows the people who make the key decisions to be unqualified. I cannot help thinking that that contributes to the problem.

In a sense, the Clydesdale Bank has been lucky, in that it was owned by Midland Bank in the 1980s, when everyone was fearful that Midland was going down the tubes—it nearly did, but the Hongkong and Shanghai Banking Corporation saved it. HSBC sold off Clydesdale, which was ill managed and ill served by its new Australian owners. There was rapid turnover of chief executives, who served for a year or 18 months, and the bank did not have the support that would have enabled it to develop a franchise. As luck would have it, that kept the bank out of some of the mires that other banks got into. Nonetheless, that inattention contributes to where we are today.

I remind members that the Clydesdale used to be called Clydesdale & North of Scotland Bank, so the matter does not concern only Glasgow; it touches on the interests of my constituents and people throughout Scotland.

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