Banking on a return to traditional fiscal values

MONDAY, 13 October, 2008, changed the face of Scottish and British banking for years to come. When the bank rescue plan was announced last week, the emphasis was on an "arms-length" approach from the state. But the reality is that the government is taking equity holdings in the big banks and, in some cases, nominating directors to their boards.

The Chancellor is insisting on the banks which receive assistance implementing new, "socially responsible" guidelines on their lending. For RBS, HBOS and Lloyds TSB these include a direction to maintain mortgage lending at 2007 levels.

The state ...