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Back to banking basics

Writing in the Observer, Gordon Brown says that, in the future, banking "becomes the servant of our economy and society, never its master."

He wants banks to return to the basics, with the keys to basic banking being "a place where people can keep their savings safe and to provide funds for those who want to borrow to invest."

That's what I thought banking was all about anyway?

Mr. Brown rules out dividing banking between the retail and commercial versus the investment banks, but does make clear that better governance is required so that banks act "in the long-term interests of their shareholders and therefore of the
economy as a whole, not in the short-term interests of bankers."

This is probably why the Telegraph reports that Labour are going to outlaw 100% mortgage offers. 

The Telegraph also details plans for the restructuring of the Royal Bank of Scotland, in order to sell £300 billion ($420 billion) of assets:

"Mr Hester (RBS CEO) will replicate a
structure he used while he was chief operating officer at Abbey in 2002 by
establishing a new division that will sit within RBS but which will be
ring-fenced from the rest of the bank …

"Among the assets and businesses to be placed in the non-core division will be
the Asian and Australian units acquired as part of the ABN Amro acquisition
in 2007, RBS's aircraft leasing unit, and portfolios of mortgage and lending
assets held by Charter One in the US."

This means they will get leaner … but not meaner as they and Lloyds ringfence £500 billion ($700 billion) of toxic assets to go into the government's toxic insurance scheme.  

That should make basic banking for deposits and savings and loans easier, shouldn't it?

Meanwhile, even HSBC is now considering a rights issue (£14 billion / $20 billion worth).

Oh yes please.  Let's get back to basics …

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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