HL Deb 22 October 1987 vol 489 cc233-5

3.8 p.m.

Lord Williams of Elvel

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government why the acquisition by an Australian bank of the Clydesdale Bank was not referred to the Monopolies and Mergers Commission.

Lord Beaverbrook

My Lords, my noble friend the Secretary of State for Trade and Industry took the view that this acquisition did not raise competition issues or other issues of public interest such as to warrant a reference. His decision was in accordance with the advice of the Director General of Fair Trading.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord for his response, so far as it goes. Perhaps I may ask him to clarify the statement made by the Governor of the Bank of England to the Northern Ireland Chamber of Commerce to the effect that it runs counter to common sense to argue that the openness of the London market must be carried to the point where control of the core of our financial system may pass into the hands of institutions whose business aims and national interests lie elsewhere. What is meant by the "core"? If the Clydesdale Bank is not part of the core, is the Royal Bank of Scotland part of the core? What are the criteria for determining the core? Who holds the magic card?

Lord Beaverbrook

My Lords, the Governor of the Bank of England, in referring to the core, was, I believe, referring to the very large clearing banks that we have in this country. I think that on scale alone the takeover of the Clydesdale and Northern banks could not be described as a very large transfer of assets.

Lord Taylor of Gryfe

My Lords, can I ask the noble Lord to read the report of Monopolies and Mergers Commission on the proposed takeover of the Royal Bank of Scotland by the Hong Kong and Shanghai Banking Corporation and the Standard Chartered Bank which lays down very firmly that it is not in the public interest for a Scottish banking institution to be owned by a foreign company.

Lord Beaverbrook

My Lords, that is rather wide of the Question on the Order Paper. I do not wish to comment on other individual situations. As regards the regional aspect, my noble friend the Secretary of State takes into account all relevant considerations and not just regional ones. The guiding principle should be that the Government intervene in merger cases only where there is likely to be a divergence of interest between the decision-makers in the market and the public interest.

Lord Grimond

My Lords, it must come as a surprise to many people (must it not?) to hear that the Clydesdale Bank is not part of the core of the banking system. Be that as it may, is it not the fact that the Clydesdale Bank is already a wholly-owned subsidiary of the Midland Bank? It may be that the new arrangements will lead to greater freedom for the Clydesdale Bank and indeed prove beneficial. Will the Minister give an undertaking that this is not to be used as a precedent for failing to refer future bids for Scottish banks, particularly independent Scottish banks, to the Monopolies and Mergers Commission?

Lord Beaverbrook

My Lords, in deciding not to refer this proposal, my noble friend the Secretary of State made it clear that the decision related only to the circumstances of the particular case and should not be interpreted as necessarily indicating his likely attitude to any further proposed acquisition of a clearing bank by a foreign company. Any such case will be considered on its own merits.

On the question of the regions, we are not convinced that mergers affecting a particular part of the UK deserve special treatment on that account alone.

Lord Williams of Elvel

My Lords, would the noble Lord accept that he has not really clarified the position as regards major banks? Would he accept that I intend to return to this at a later stage, probably in the form of an Unstarred Question which is perhaps more suitable?

Lord Beaverbrook

My Lords, that is of course a matter for the noble Lord. I shall be pleased to answer any Question he might put down.

Baroness Seear

My Lords, would the noble Lord inform his colleague the Secretary of State that we much regret his absence when a matter of such importance is being discussed?

Lord Mackie of Benshie

My Lords, was the noble Lord referring to Scotland as a region.

Lord Beaverbrook

My Lords, I was talking about regional policy. I was not referring to Scotland specifically as a region.

Lord Ross of Marnock

My Lords, is it not rather out of place to refer to Scotland at all in this respect? Has not the Clydesdale Bank already been taken over by the Midland Bank?

Lord Beaverbrook

My Lords, I think I should clarify that I actually referred to a particular part of the United Kingdom rather than just a region.