25/04/2013 Newsnight Scotland

Tonight on Newsnight Scotland: The Holyrood leaders have decided to

back UK-wide press regulation. But will the Scottish newspapers be

prepared to go along? The Co-op have said no to buying

the TSB. Is it a problem that our choice of high street banks is so

small? And what could be done about it? Good evening well if you

thought press regulation was already confused following the

Leveson Inquiry, it just got a lot more confused.

Today, Scottish politicians decided to go along with West Minister's

proposals for a new system based on a royal charter, just as the main

London newspapers said they wanted nothing to do with the charter.

We'll hear in a moment what the Scottish newspapers make of today's

developments. If the economy could grow based on

committees alone, the debate about press rich relation should have

propelled us into an unsustainable boom by now. Alex Salmond set up a

Commission to fashion a specifically Scottish solution to

the issue. But none of the politicians liked what he said, so

they decided to ignore him. The main parties agreed they would go

along with whatever Westminster came up with instead. Now they have

downgraded their own role to make sure what is agreed in London

complies with the more here. Things are moving rapidly at Westminster.

We have to make sure our responsibilities are dealt with and

that is what we have been able to do. Down there, there has been a

similar flourishing of committees and late-night meetings. The

Government, with the agreement of the opposition, has published a

Royal Charter which would govern a new system of policing for hacks.

They worry it is state control of the press by the back door, and

most of them said they won nothing to do with it. Now there is a love

in between Holyrood and Westminster and a Mexican stand-off between the

press and the politicians. As for clarity? We can forget about that.

I'm joined from Edinburgh by the director of the Scottish Newspaper

Society, Jim Raeburn. The politicians here and in

Westminster may have agreed with each other, but to the newspapers

in Scotland want any more to do with this new system than the

newspapers in London want anything to do with it? We certainly don't

want the Government sponsored Royal Charter that was published on 18th

March. For that reason today, we have indicated and announced we are

proposing a Royal Charter, an industry based one, which is based

on essentially an agreement we reached with the UK Government

ministers in February. But then it was suddenly changed as something

considerably different. It is confusing, all of these things

going on. Basically, when most of the newspapers, the Fleet Street

papers are today, we do not want your Royal charter, we will have a

charter of our own. The Scottish newspapers are signed up to what

most of the newspapers in London have said today? Agreed, yes we are.

The what is the difference? Succinctly, it he would come,

between the Royal Charter you are proposing and the political parties

in Westminster are proposing? The have any role in deciding who would

be on the regular regulatory bodies? Politicians would be

removed. We were anxious to keep a free press. The statutory

underpinning that comes from the UK Government's proposed Royal Charter,

that it would be -- wouldn't be part of the equation. One thing you

do welcome, I assume this new agreement between the politicians

at Holyrood and Westminster, and the holly rude basically saying, we

will do what London decides. You presumably like that, because you

did not want separate legislation here? We have had meetings with the

the party leaders and we made it clear the Scottish newspaper

Society did not once in Scotland only arrangement. Newspapers

circulate both sides of the border single, UK wide solution based on

self-regulation. How far are you prepared to push this? We heard

David Cameron said he would look at what you were suggesting, but it

sounded to me like he was just being polite. Ed Miliband said

let's press on and do the Government's version, because this

has been agreed by all the main parties. Are you prepared to defy

it if they go ahead and do what they are proposing to do?

fundamental is, there has to be industry by into what ever

arrangements. But you could face legal penalties. If it came to a

court case about an allegation and newspaper had maltreated an

individual but could be punitive signed up to the new scheme?

legislation that has been passed in Westminster and applicable to

England and Wales provides for exemplary damages which can be

awarded against a publisher that is outside the regulated system.

in newspapers in Scotland, would they be prepared to take that risk,

rather than sign up to what they see his Government regulation?

There is a big question to whether exemplary damages would be awarded

under Scots law. That is a big question. But I think, even if

there was a case in the English courts were exemplary damages was

to be awarded, I suspect one of the major national newspaper groups

would contest that all the way through the courts, write to Europe.

There is a widely held view... you are saying is, you would defy

it and your belief is that challenge it through the courts

system this system of exemplary damages wouldn't work? Correct.How

comfortable are you with this? The press has come in for a lot of

criticism. You are effectively defying the will of two parliaments

now? I am not sure that is entirely the case. The industry has come in

for some criticism for understandable reasons. We

recognise there has to be changed and we want to work with

governments north and south of the border to achieve the change in a

way which is providing for effective and independent self-

regulation. What we have proposed goes a long way towards that. Now,

I would suggest somewhere along the line there has to be a meeting of

minds, there needs to be more dialogue. Thanks very much indeed.

It used to be the bank that liked to say "yes". But the Co-op has

said no to buying old TSB branches. The Government had hoped that an

expanded Co-op would create a new force in high-street banking. But

with mergers forced on the banks by the financial crisis, are customers

losing out? Andrew Black reports. Back in the 80s, the TSB was aiming

high. The institution founded in Dumfriesshire in 1810, floated on

the stock market raising more than �1 billion. It has been part of

Lloyd's since the 90s, but now the banking group's enforced sale of

thousands of branches has fallen through. Its plans by a, the Co-op,

got cold feet and pulled out, sparking concern about decreased

competition on the high street. In Glasgow's trendy West End, how much

choice to customers get? Bank of Scotland, which merged with the

Halifax, and then became part of Lloyds Banking Group following its

acquisition of HBOS. Lloyds TSB forms through the merger of Lloyds

Bank and TSB Group. Then there is Santander, the Spanish bank which

in the UK bought up Abbey National, Bradford & Bingley and Alliance &

Leicester. And a few doors up, there is another Santander. And

what about Clydesdale Bank? It survives for now, but its

Australian owners say it has become a problem. Then there is RBS, and

that is mostly owned by the taxpayer. Industrialisation came on

stream, the Royal Bank of Scotland... Historian, Duncan Ross

says today's landscape is different to the way things used to look.

It's very long and rich history and the Bank of Scotland, its 1690, and

many others in the 18th century. And a range of conventional banking

companies that were established in the 18th and 19th centuries. For a

long time Scotland has been very well banked. But these days, why

are potential investors are cautious when it comes to banking?

We are asking banks to be much safer and less reckless than they

were, but with good reason. We are blaming them that they don't lend

enough and asking them to put aside a much bigger offers for when they

hit problems. We are not willing to pay the price for more expensive

lending and more difficult conditions being attached. And we

want banks to be confident enough to lend and take risks and support

the economy, but we want them also to be there to beat them over the

head and banker bashing is still a national sport. Between all these

tensions and pressures we have not made it an attractive place to be.

Some people are still making a lot of money out of it, but it you are

going into a sector at the moment, given the amount of uncertainty,

the amount of regulation new phase, it does not look like a very

attractive place to work or invest. This summer will see the creation

of a new TSB stand-alone bank, to be sold through a stockmarket

listing. But with the future still looking uncertain, when we again

ever see the likes of a bank that likes to say yes? I am joined from

Edinburgh by Ray Pearman, author of Hubris, a book about the downfall

of HBOS. And by the financial journalist, Ian Fraser.

Let's be positive. Imagine, you have now got the TSB branches

floated off, over 600 of them. RBS are selling 300 branches which they

are being forced to do by the European Commission will. National

Australia might be willing to sell Clydesdale and Yorkshire banks. You

put that lot together and you have got a major, new force in British

banking that could introduce an competition? A new force in British

banking, we have had that before with the beginning of HBOS 10 years

ago. It ended in tears. I think we want three or four new challenger

banks. They need not be National in scale, they could be regional and

small. A sustainable banking sector I think has different sizes. It has

been banks, small banks, National banks and international banks and

regional banks. I think that is what we need for sustainability and

economic well-being. Ian Fraser, can you see something positive in

this? It could end up beget more competition than a bit less? It is

possible, but it is disturbing the co-operative decided against going

ahead. It may have had some issues with the branches that were up for

sale which might deter other purchasers. Maybe there is some

hidden problems within those branches it identified through the

due diligence process which might deter other potential buyers.

is your view on that? The other side is the view is actually that

there was... How can I put this? There were questions asked about

whether the manager of the Co-op could really handle such a big bank,

rather than there was a problem with the branches they were going

shareholding as not open to it. We cannot put huge amounts of new money

into it. There are a number of problems which are insurmountable.

It did make an acquisition of the Britannia building society a few

years ago and it has taken a long time to digester. We can act as the

desirable outcome that we could break up banks like RBS and have

lots of new banks? Will there be room for the old-style TSB? A lot of

these branches are in areas which are not the richest areas of the

country. Is there a sustainable model doing the old-style banking?

think it would probably struggle. If it does get floated as an

independent bank, which Lloyds says it may do, the danger -- sorry,

there is a real danger that, if that does happen, it will get swallowed

up. We have very feeble anti-trust rules here in the UK and the

Competition Commission is generally pretty weak in terms of blocking

deals. We saw that on numerous occasions over the last two decades.

There would be a fear that, if it became an independent company, it

would soon after be taken over by a rival bank. Should the government be

a bit more active than this? The government says it wants more

competition but these three branches could be bought by a private equity

firm who then flog it off after a few years. I think that is the

point. We need political courage. We need politicians to say that we need

a more sustainable banking sector and we are prepared to do things we

haven't done before. Example, to say that this new bank will have

protection from the competition authorities for a certain number of

years in order to establish itself. If we want to go back to having an

banking system like before then the politicians have to do that. I find

it difficult to define what the attitudes to any of these things in

the financial industry are. TSB was very strong in Scotland so the

advantages will be weighted strongly towards Scotland. It could be a bank

which does well for the Scottish economy. I think the Scottish

Government needs to start lobbying hard for the outcome it thinks is in

the best interests of Scotland. we, in an attempt to compensate for

the lack of regulation which led to the financial crisis of 2008, led to

making it much more difficult for new entrants? It is pretty well

known that one of the fears that the Co-op had was that it would be

pledging to much capital to meet new equity rules if it's tripled in

size. Are we making it more difficult for newcomers to get

started? I think there is a degree of truth in that but I think the

capital requirements prior to the crisis were incredibly low. 2% of

assets. They are increasing it to approximately 9% under new

legislation which comes in effect in 2019 but personally personally I

feel that is sensible. We talked about RBS. Is there a case for the

government being more radical there? The position seems to be to keep the

shares until they go up which is a legitimate thing for them to say but

it could say, let's be a bit more radical, break that up as well.

less an authority than the Archbishop of Canterbury has called

for that. There was a very interesting opinion poll last week

which asked people, do you think the government should get out of banking