The banks deserve some credit too. Thursday was also the day when Thomas Cook, the travel company, announced that it had raised £300m through a stock market rights issue at 76p a share.
Some 18 months ago, with its share price in single figures and facing out-of-control losses which threatened to overwhelm it, this company was also within hours of bankruptcy. Credit for rescuing it in this case goes to the much-maligned RBS. Given the scale of the losses, the level of debt the company had already incurred and the scale of the reorganisation needed, Derek Sach and his restructuring team within RBS were hugely courageous in their determination not to let the business collapse. Against most of the betting, they have succeeded. Now, though the company is still not profitable, it is sufficiently recovered for its shares to be up tenfold and others in the stock market to be willing to support it.
Separately, the Chancellor, George Osborne, let it be known this week that he was flirting with the idea of splitting RBS into a good bank, which could return to the stock market, and a bad bank, in which all the problem loans would be dumped.
But what Thomas Cook and Sunseeker both show is that things are often not that black and white. Companies which might appear to be basket cases can be restored to health with the right management strategy and banking support. But they need people around who know what needs to be done and have the wherewithal to do it.
Once in a bad bank one suggests troubled companies would get neither. Government would be loathe to allow new loans to be extended to allow time for a turnaround strategy to be developed, and the people skilled in doing this work would not be willing to put up with Whitehall constraints – or pay.
The downside of a bad bank is therefore that it would make it unlikely that we would see many more Thomas Cook-style rescues. Instead, businesses which could perhaps have been turned around will be left as neglected zombies – trapped by debt in a demoralised half-life, where all they earn goes on paying the interest, where there is no capital for expansion or investment, devoid indeed of hope.
That seems a high price to pay just so the Government can claim it has “solved” the banking crisis in time for the next election.