Even so, there's no doubting the seismic nature of the decision not to refer. For a Labour government to sanction a cost-cutting merger of this sort, that will see thousands lose their jobs over the next few years, is powerfully symbolic of how far the old has been left behind by the new. By doing so, Mr Byers may also have opened the floodgates to a string of copycat takeovers in the British banking sector, with Barclays and the converted building societies the obvious next targets.
It would be wrong to characterise this as Mr Byers having declared open season in the banking sector, since the Government would plainly move swiftly to block any merger that was uncompetitive. Any similar move on NatWest by Barclays or Lloyds TSB would presumably be packed straight off to the Competition Commission.
However, having now cleared Bank of Scotland, the Government would be hard pressed then to question foreign bids for British banks, if there were no prudential grounds for doing so. In that sense, Mr Byers' decision is similar in its import to the previous Government's action in allowing bids for Britain's regional electricity companies, which Labour railed so much against when in opposition. That process, it will be recalled, ended with virtually all Britain's distribution companies snapped up by foreign predators. Does the same fate now await the banking sector?
Even a few years ago, such a prospect would have brought howls of protest from City establishment and banking supervisors alike. It would be tantamount, some would argue, to surrendering the main arteries of economic activity in Britain to foreign control. These days we take a more sanguine view of these things, and with the cosy establishment cartel that used to run the banking system giving way to a much more vibrantly competitive environment characterised by a plethora of online new entrants, it matters little who owns and controls our banks provided they are adequately supervised and their depositors are properly protected.
From the sidelines, Gordon Brown and the Treasury have been positively cheering the Chancellor's Scottish compatriots on in giving the stuffy old English clearers a good kicking, and it is impossible to think Mr Brown didn't have a hand in Mr Byers' decision. Far from urging an activist stance, because of the Treasury's ongoing investigation of competition in the banking industry, Mr Brown has taken the view that a takeover free for all might act as a catalyst for change.
There's a bit more of a competition case for referring Royal Bank of Scotland, which if combined with NatWest would have a higher proportion of small business lending than Bank of Scotland. It also has a quite significant degree of branch overlap with NatWest in the North-west and London. Even so, the betting has to be that Royal too will slip through the net and that Scot will be pitched against Scot in the battle for NatWest. Now then. What are we bid for Barclays?Reuse content