Royal Bank of Scotland

Debate between Jeremy Quin and Douglas Carswell

Thursday 5th November 2015 Commons Chamber

[Jeremy Quin]

I will make a negative point and a positive point. On the negative side, I do not think that tackles my concern that smaller banks would have higher costs of capital and scarcer resources, making them less able to lend to smaller businesses. I think the hon. Lady would agree—my hon. Friend the Member for Hazel Grove certainly would—that there is still a huge crisis in confidence in the major banks, and the last thing a lot of small businesses want to do is ask for a loan, because they are worried about the rug being pulled from underneath them. That process is going to take years to address.

Internationally, I do not think that the United States, given its overall funding strategies and the use of capital markets by corporates, presents Europe with a useful analogy. The caja banks in Spain were regionally focused and regionally driven, and they made huge investments in regional projects, but they have been a disaster and brought the Spanish economy crashing down. I acknowledge the historical success of Sparkassen and Landesbanken in Germany, but I fear that what happened to them during the crisis could happen elsewhere. The inability of Landesbanken to get local lending projects that more than met its cost of capital meant that it ended up taking on very risky investments in Europe, which helped to precipitate the Eurozone crisis

[Mr Douglas Carswell (Clacton) (UKIP)]

And bonds.

[Jeremy Quin]

As the hon. Gentleman says, the wrong kinds of bonds in the wrong kinds of markets also inflated the credit bubble.

I fear that there are no overseas alternatives that would act as a panacea. There is no reason why we should not do something by ourselves, but I am worried that it would be a distraction at a time when we really want money to be flowing out of banks and into the real economy. For that reason, no matter how lonely it makes me, I oppose the motion.