BGN Entrepreneur

The credit crunch has handed the government the means to create a British Banking Corporation. UKFI should consider buying out the minorities of RBS with the proceeds of the sale of its minority stake in Lloyds, and then inject Northern Rock into RBS.
The bank would need to be owned by a trust modelled on the BBC’s, with a long-term charter to offer high-quality, affordable banking services to the retail and wholesale sectors. The charter would require it to remain independent of government interference and to operate on commercial principles, with a targeted return on capital that is debated and agreed by Parliament, with reviews every ten years. Any profits above the targeted rate of return could be used to fund a long-term development bank for infrastructure projects such as high-speed rail. The prospect of a stable banking industry, with profits held in check by the presence of one large, not-for-profit player, would make the recent bail-outs seem a price worth paying.

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