Isn’t it great when someone stands up and explains simply and articulately how to solve a complex problem? It is…no honestly it is. They do it in such a way that you find it impossible to argue and wonder why you didn’t come up with the solution yourself or why no-one else has done so before.
Today was the first in a series of Scotsman Conferences – this one looking at the outlook for Edinburgh over the next five years. So cue lots of elephants in rooms and going forwards. But cue also the solution to the banking crises, financial services regulation, and how to establish Edinburgh as a financial global leader – all delivered in about 20 minutes.
Ben Thomson was second up at the conference – just behind a rather unusually careful & cautious John Swinney. Ben Thomson is the Chair of Noble Group and of all the speakers at the conference it was him that stood out (with one other notable exception that I’ll cover some other time, architect Malcolm Fraser).
I hope Mr Swinney was listening to Ben because if he was he gave him a blueprint to deliver us from evil.
First Ben outlined the issues…
1. certain parts of the banking system cannot be allowed to fail.
2. rules and regulations are not effective in controlling risk.
3. banks will look to the most favourable country to carry out their business.
4. carrying out deposit taking and investment banking under one roof doesn’t make sense.
5. banking pay and bonuses are out of line with the skills and the risks they take.
Then Ben outlined the solution…
1. Scottish banks & financial services should embrace new regulation and lead the way via an international summit (Basel 2 style). Allowing Edinburgh to take the initiative and set the city up as a regulatory centre of excellence.
2. Create utility depositing taking banks by encouraging Tesco Bank and Virgin Money but importantly demerge RBoS and Llyods HBOS to create 2 established retail banks. These narrow (sleepy giants) would be safe houses for savers and for those who simply need a bank to look after their savings and current account. This would allow Investment Banks to get on with taking the risks they are required to take by their investors.
3. Encourage further spin outs from the demerged (government owned) banks, let the home grown Scottish Widows and others flourish to ensure that others will find a home in Edinburgh/Scotland.
Then Ben outlined the infrastructure required to make it happen…
1. a trained workforce already largely in place
2. better transport between Glasgow and Edinburgh
3. stronger international air connections
4. improved digital communications
5. a regulatory environment controlled in Scotland
6. a living environment that supports communities with strong schools
7. a tax regime that encourages enterprise
And that’s it. What else is there to say? I’ve heard Mervyn King talk about narrow banks – but didn’t think it stood a prayer of a chance. I’ve heard politicians talk about changing the FSA/Govt/BoE relationship – but thought it was more moving deckchairs than a credible solution. And I’ve heard of High Speed 2 and Glasgow Bullet trains – but reckoned I’d be getting a bus pass long before the work even starts.
But here was Ben Thomson making it all join up and arguing the need for the strategy with patient, clear, obvious logic. And it was done by putting the Financial Services world at the centre – yet in a way that society benefits from.
Very clever, very clear, very refreshing.
Ben’s clear analysis and refreshing solution makes you wonder what politicians find to argue about.
I can’t see anything to flaw Ben’s strategy – so in the absence of anyone else articulating anything better (sorry that should just have read “anything”) – let’s go with that.
No elephants, no going forwards, just a strategy we can all agree with. Where do I sign?
Scotsman Conferences: http://scotsmanconferences.com/