This morning, the Shadow Chancellor Ed Balls suggested that high street banks should be forced to sell off branches. The intention is that these could be sold to “challenger” banks, which would create more competition.
This isn’t a proposal you’d ever see from the Conservatives – it involves forcing a private institution to sell something it owns, and in many (if not most) cases, has built itself through being successful. Interestingly, the list of banks Mr Balls mentions includes HSBC, which sought no financial assistance from the government as a result of the economic crisis*. This makes the issue one of principle for all parties, and raises two broad questions:
- Should a private company ever be forced to sell something it owns?
- If we accept there are circumstances where they should be forced to sell, should they still be forced to do so if it is the industry that is at fault and not the company itself?
I’d be interested to know people’s thoughts (and arguments) on this. I suspect we might hear technical and practical arguments over the next few days, but I can’t help but wonder about the principles behind it, and whether this is now widely regarded as proportionate and appropriate course of action. I suspect the LIBOR scandal will change people’s views and make the public more sympathetic to forced sales involving banks, but it will be worth watching how those views change as the investigation goes on.
*As far as I’m aware. Happy to be corrected on this point if I’m wrong though.