Labour urges bank 'decline' probe

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Scottish Labour has called for a special inquiry by Holyrood in to the "decline" of Scotland's biggest banks.

Finance spokesperson Andy Kerr called for the establishment of an "ad hoc" Scottish Parliament committee.

He wants it to examine the economic implications of the failure of institutions such as RBS and HBOS.

The Scottish Government welcomed the move but stated that any such inquiry should examine the actions of UK financial regulators.

Business managers

The Royal Bank of Scotland (RBS) and Halifax Bank of Scotland, two of Scotland's biggest companies, both required billions of pounds of government support last year.

The government took major stakes in both HBOS, which has since merged with Lloyds TSB, and RBS to prevent them from collapse.

Mr Kerr has written to the other political parties, as well as Independent MSP Margo MacDonald, on the issue.

Labour politicians are also planning on raising the matter with Scottish Parliament business managers.

Mr Kerr said: "If the Scottish Parliament is about anything it is about examining the decline of some of our biggest financial institutions and its effect on our economy and people."

In his letter the Labour MSP argues there is a role for Holyrood to examine the longer term implications for jobs, as well as looking at the "over-riding strategic objectives" of organisations such as RBS, HBOS and Dunfermline Building Society - which was saved from collapse after a rescue deal with Nationwide.

The Scottish Government favours a comprehensive Scottish parliamentary inquiry into Scotland's banking sector John SwinneyFinance secretary

Mr Kerr suggested Sir George Mathewson, the former chair of RBS and the chair of the Scottish Government's Council of Economic Advisers, could give evidence to any inquiry, together with former Bank of Scotland chief executive Sir Peter Burt.

Last year Sir George and Sir Peter put public pressure on HBOS in an attempt to force senior figures in the bank to stand down. They wanted to replace the top men and scrap the merger with Lloyds-TSB.

Mr Kerr also suggested that the current management of RBS, Lloyds and Dunfermline/Nationwide could be asked to give evidence to any inquiry.

A spokesman for Finance Secretary John Swinney said: "The Scottish Government favours a comprehensive Scottish parliamentary inquiry into Scotland's banking sector.

"I welcome Andy Kerr's support for an inquiry into the difficulties encountered by RBS, HBOS and the Dunfermline Building Society, which must include evidence from key members of the tripartite financial regulators - the UK Government's Treasury, Bank of England and Financial Services Authority."

The spokesman added: "It is simply not possible to conduct a thorough and valuable review of events without the inclusion of the UK's financial regulatory bodies, and I hope Andy Kerr joins the Scottish Government in supporting a wide-ranging inquiry by Holyrood's Economy Committee - which the committee is already exploring.

"Only then will we be able to learn the lessons from the failures of governance and regulation, and the creation of the age of irresponsibility."