§ 4.8 p.m.
§ LORD SHACKLETONMy Lords, with permission, I should like to repeat a Statement which was made by my right honourable friend the President of the Board of Trade in another place about the proposed bank mergers between Barclays, Lloyds and Martins Banks. The Statement is as follows:
"I announced on July 9 that I had received the report of the Monopolies Commission on these proposals and that the Commission had found against them by a majority of six to four. The Government have now received representations from the banks, and, in the light of these and other comments and representations, have studied carefully both the conclusions of the majority and the note of dissent by the minority.
"The Government accept the conclusion of the majority. They consider that the proposed mergers between Barclays and Lloyds, or between Barclays and Lloyds and Martins together would be contrary to the public interest and therefore should not proceed. The Government see not objection, however, to Martins joining with another bank.
"The Government believe it essential to maintain a sufficient number of sources of finance for small and 1267 medium-sized businesses, including in particular the fast-growing innovating companies, and they consider that the structure of banking which would result if the mergers went through would lead to a less satisfactory competitive situation. These disadvantages outweigh, in the Government's view, the cost savings to be expected from the merger, especially in the light of the majority's doubts about the likely size and speed of these savings in a less competitive situation.
"Moreover, there is a danger that the mergers might lead to pressure for still further concentration and hence eventually to a two-bank system. The Government believe that this pressure would be stronger than the Commission suggests, and they share the view, expressed both by the majority and the minority, that a two-bank system would be clearly undesirable.
"The Government have noted the criticism expressed by both majority and minority of the agreements between the banks on deposit and landing rates. In the light of this criticism we shall again review the arguments which have hitherto led to the conclusion that these agreements are not, on balance, against the public interest.
"The Government have communicated their views on the proposed mergers to the banks concerned and I am glad to announce that they have informed the Governor of the Bank of England that in these circumstances they do not intend to proceed with the mergers".
§ My Lords, that concludes the Statement.
EARL JELLICOEMy Lords, I should like to thank the noble Lord for repeating the Statement. As I happen to bank with one of the banks concerned, I suppose that I must confess an interest—or rather, I fear, a disinterest. I should like to ask the noble Lord just one question on this Statement. Can he tell us how the Government propose to review the pros and cons of the arguments about the agreements between the banks on lending and interest rates? Will that be done in consultation with the banks and other interests, or what sort of procedure is envisaged by the Government?
§ VISCOUNT STUART OF FINDHORNMy Lords, is not this a complete contradiction of the Labour policy of nationalisation, which obliterates competition? I do not mind, and it is not my business, but in other cases they object because competition remains.
§ LORD SHACKLETONMy Lords, I think the noble Viscount, Lord Stuart of Findhorn, is just a little out of date.
§ LORD BYERSMy Lords, I should like to thank the noble Lord for making that Statement in this House. While agreeing with him that the proposed merger would be against the public interest, may I ask whether the Government propose to do anything about the second majority suggestion, that in the interests of improved efficiency banks as large as these should publish full accounts. I do not know whether I have to declare an interest, but I have an overdraft at one of these banks.
§ LORD SHACKLETONMy Lords, on the first point of the noble Earl, the Government are in fact proposing to review these matters both internally and externally, and will take full advice. In answer to the noble Lord, Lord Byers, the President announced on March 20 that the banks would be required to provide, in confidence, full information to the Bank of England for transmission to the Board of Trade about their profits and any reserves, so that Her Majesty's Government would be able to review after a period of time the need for continuing the exemptions. If it becomes clear that it is desirable to remove the exemptions from that particular class of banks before the review of all the accounts is completed, the Government will take the necessary action. In other words, both matters are under active consideration.
LORD SALTOUNMy Lords, may I suggest to your Lordships that from the beginning of this House practically until to-day your Lordships have always spoken upon your honour— that is, in accordance with the terms of the last but one of our Prayers, "without fear or favour or partial affection"—and that we should continue to do so and cease to declare an interest?