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Strict neutrality

Brian Taylor | 17:44 UK time, Thursday, 30 October 2008

And so Holyrood has signalled its majority disquiet at the takeover of HBOS by Lloyds TSB.

By 61 votes to 40, with two abstentions, MSPs backed the view that there was "a very real possibility" of finding a solution which maintains HBOS as an independent bank.

This motion was advanced by Tavish Scott, the leader of the Scottish Liberal Democrats, who was early in the field with opposition to the merger.

It won support from SNP members who are, as discussed previously, intuitively supportive of maintaining as much autonomy as possible for the Bank of Scotland.

Margo MacDonald also backed Mr Scott's motion.

Labour and Tory MSPs voted against. In the division, there were several absentees. You'll find them in Glenrothes, should you care to look.

At the same time, Chancellor Alistair Darling has said that "if for any reason the merger did not go ahead" then the Financial Services Authority would require to reassess the extent to which each bank, individually, would require recapitalisation by the UK Government.

New sums

Mr Darling's comments, in a letter to the first minister, confirm that the existing recapitalisation offer was calculated on the basis that merger had already been backed by the boards of both banks.

That does not mean "wholly dependent". It does not mean "predicated". It means that the sums have been done for one set of circumstances: a merged bank. New sums would be needed if the merger doesn't happen.

Which leaves us where? The Holyrood vote is a considerable fillip to the political campaign to maintain HBOS as an independent bank.

Mr Scott challenged UK ministers to "listen to the will of parliament". Given that they sit in - and report to - a different parliament, I don't expect that to happen any time soon.

Plus the chancellor is NOT lending his weight to the campaign against merger with his letter to the first minister.

Rather, under persistent pressure, he is spelling out the arithmetical and technical facts.

Maximum scrutiny

However, there is more to this for Mr Darling - who is an Edinburgh MP.

For all that he protests his strict neutrality in this matter, he has to be concerned about the jobs and influence aspects as far as the Scottish capital is concerned.

In practice, though, little has changed. As things stand, the merger proposal is backed by both banks - and will be put to their shareholders.

It is, however, decidedly legitimate for politicians to subject this to maximum scrutiny. The vote - and the correspondence with the chancellor - add to that.


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