There is no other way of saying this: the proposed takeover of HBoS by Lloyds TSB is a bad business idea, full stop. It is bad for employees, bad for customers, bad for Edinburgh and bad for the Scottish economy.
Make no mistake, if you felt aggrieved that the earlier merger with Halifax diluted the "Scottishness" of Bank of Scotland then be prepared for much worse to come.
When the proposed merger between HBoS and Lloyds TSB (or, to be precise, takeover
by Lloyds) was announced a few weeks ago I was in London on business. The reaction among the City and other financial services types with whom I mixed was that "the Halifax is being taken over by Lloyds TSB". The term "Bank of Scotland" or even "Halifax Bank of Scotland" was hardly ever mentioned.
Of course we are all used to finding ignorance of Scotland south of the Border but this is something else – the distinct possibility of the near obliteration of the unique national identity of a Scottish institution that has prospered for most of its 300-plus years of existence (including the two biggest and costliest global conflicts ever seen).
Politically I am not a nationalist but when thinking of the proposed takeover, the words of Parcel of Rogues, Burns's comment on the Union of 1707, keep coming back: "Farewell to all our Scottish fame . . . farewell even to our Scottish name".
But there are also good practical reasons for worrying about the diminution or perhaps even total loss of the Scottish identity. Bank of Scotland – even Halifax Bank of Scotland – was not so named for nothing. The "Scotland" bit means more than a sign over a branch doorway. It is an indication that the bank is headquartered, or at least part-headquartered, in Edinburgh and that its senior personnel know what makes Scotland tick, in both the business and socio-economic sense. Given that Lloyds TSB is the predator and has a London-centred management structure, Scotland is likely to become a branch of a merged bank's wider economy, even if the new management offers some sort of fig leaf by placing a divisional HQ on The Mound.
Because of even wider economic issues, jobs in banking and financial services in Edinburgh will go and in this respect the proposed merger is likely to make a bad situation even worse. House prices will fall, almost certainly putting anyone who purchased a property in the last two years into negative equity. There will be less money to spend in the shops, which will not just affect retail jobs but will seep through into commercial property values, making Princes Street and George Street less attractive to investors. Hotels, restaurants, bars, taxi drivers, sandwich shops, even flower sellers on street corners, will all experience a drop in trade. The growth in direct overseas flights from Edinburgh Airport – which local business and leisure travellers alike have welcomed – could be put into reverse.
It is true that nowhere in Britain will be immune from the effects of a severe national economic downturn but the worry is that given Edinburgh's reliance on financial services, this city has harder and longer to fall than any other.
What I find particularly frustrating is the thought that, when the threat to the city's economy could be mitigated by HBoS staying independent, this merger should still be going ahead at all. With the bank battered by stock market selling, a takeover by Lloyds TSB seemed at one time to be a welcome intervention, especially as it offered the prospect of rescuing HBoS from total collapse. But it has now emerged that Lloyds TSB itself has had to go to government seeking money, albeit to a lesser extent than HBoS. There may have been a time when a merger seemed the only option but that is no longer the case – especially when Hector Sants, chief executive of the Financial Services Authority, states that HBoS (with an injection of government funds) is now sufficiently capitalised to stand alone. Quite simply, the raison d'etre for the original proposal to merge has been overtaken by events.
At the end of the day a fusion of HBoS and Lloyds TSB may still be the least-worst option (I cannot bring myself to say anything "good" about it) but the situation has changed so much in just a few short weeks that, at the very least, merger talks should be suspended and other options seriously explored before any resumption takes place.
Who knows, one alternative might even be to consider splitting Halifax from Bank of Scotland, a move that I am sure would meet with much approval not only in Edinburgh but across Scotland.
David Alexander is sole proprietor of DJ Alexander, which is based in Edinburgh and is Scotland's largest independent residential letting company.
