RBS: Oil Bank of Scotland to Green Investment Bank?
As Richard Murphy has already pointed out, the FT has two bank related stories today – one saying that the Treasury hopes RBS will be privitised next year. The other says something that’s been rumour for a while – that the Treasury is opposing moves to make the promised Green Investment Bank a real bank that can borrow, lend and leverage, etc.
The first of these may come as a surprise. PriceWaterhouseCooper wrote a report in 2009 saying the Government should re-privitise RBS over the course of seven years or so. But the government is so ideologically opposed to having any kind of democratic control over finance that it is willing to risk the economy in order to send this bank off into the fray long ahead of this timeline. More to the point, the question should not just be “when will we privitise RBS”? but “What should we do with RBS”. This is a massive question: when they were bailed out, RBS were, by assets, the biggest company on earth. The problems with RBS go from surface to core of the problems with our whole global economic system. There is no magic bullet answer.
However, this is where the second story – about the Green Investment Bank – comes in. This story may not be a surprise, but it should be shocking. About a year ago, my fellow Bright Green editor Gary Dunion and I, in our then day jobs, went with one of Alasdair Darling’s constituents to a surgery meeting she’d arranged to discuss green finance. He was very insistent: the Green Investment Bank was the government’s climate finance strategy. Its ability to lever in extra money was the thing that made it worthwhile, in his opinion. I don’t think the bank he promised is anything like enough. But it was a step in the right direction, and it was what we had been promised. And now it seems that the Treasury are insisting on removing the powers that it would need to be even vaguely worthwhile.
So, why am I writing about these together? Well, part of the problem with setting a Green Investment Bank is logistical: it is a lot of work to set up a whole new bank. Much easier to hive off another part of a bank you already own, especially if, like RBS, this bank already has a world leading team of experts in energy finance. Additionally, RBS is responsible for financing (with our money) projects and companies delivering around 3% of global carbon emissions – much, much more than will be saved by the Green Investment Bank. Turning its energy team into a low carbon energy team is a double win. You stop the emissions they are helping to produce, and a back a low carbon revolution. Sure, they’d need re-training. But if we are setting up a Green Investment Bank, someone is going to need that training, and people financing oil projects are probably about as good a team as you are going to get.
This isn’t my idea. Lots of experts have been telling the Government that they should be splitting the relevent sections from the rest of RBS, and turning them into a state owned Green Investment Bank.
Since our banks were set free, they have driven us over the brink. The credit crunch was a disaster caused by our banking system. Food speculation delivering soaring costs. And it is banks who are arranging and financing fossil fuel extraction projects that will ensure run-away climate change if they aren’t stopped. How we reform this system before it destroys us will be a global question. But the UK can and must play our part. And the fact that we own 84% of one of the biggest banks on earth means that we have a massive leaver to pull. If the government sells off RBS next year, it will be showing that it has learnt nothing at all from the credit crunch, and is willing to do little or nothing about climate change. It will be confessing that it has no new ideas for how we can run our economy. And so it will be condemning us to further future recessions and to increasing climate chaos. That’s quite a legacy.