§ 10. Mr. Campbell-Savours
To ask the Chancellor of the Exchequer when he next intends to meet the Governor of the Bank of England to discuss matters relating to the British banking system.
§ Mr. Campbell-Savours
When the Chancellor next meets the Governor, will he raise with him the question of political contributions made by banks in the United Kingdom? Is not it true that Bank of Credit and Commerce International associate companies paid money to the Conservative party? Can those moneys now be returned to the banks for use by the liquidators so that at least some people will get their money back?
§ Mr. Maples
Hon. Members should be careful before saying "Hear, hear". The hon. Gentleman is in the habit of making unsubstantiated but very serious allegations in this place. To make one the day after the chairman of the Conservative party has said that, to his knowledge, no contributions were received from BCCI or from any of its senior executives surpasses even his usual low standards.
§ Mr. Gerald Howarth
When my hon. Friend next meets the Governor of the Bank of England, will he impress on him the great disillusionment felt by industry, especially manufacturing industry, about the way in which the clearing banks have been behaving, particularly in the past few months during the recession? Is he aware, for example, that a number of companies are bypassing the banking system altogether and placing money through solicitors so as to avoid arbitrary action by the banks? Will he ensure that the Governor makes it perfectly clear to the clearing 433 banks that they are a service industry and that it is their duty to ensure that their customers, as the wealth creators, prosper before the banks take their cut?
§ Mr. Maples
As my hon. Friend will know, the Treasury and the Bank of England looked into the whole matter of the banks' treatment of small businesses in considerable detail. They asked the banks to come up with codes of conduct in relation to their dealings with small business customers. I am delighted that the Midland bank has already published its code, which we will study carefully. I believe that the other banks will publish their codes before the end of the year. If my hon. Friend has any specific instances of what he mentioned, I should be grateful if he would let me or the Governor know of them.
§ Mr. Maples
As the hon. Gentleman knows, the Bank of England stood ready to look at any proposal made to it for restructuring the bank. Unfortunately, that has apparently not been possible—no such proposal has been made to it. On 2 December, the date to which the hearing was adjourned, the deposit protection scheme will come into operation. It is more generous than the one which the Abu Dhabi authorities offered. So depositors with sterling deposits in United Kingdom branches of BCCI will receive 75 per cent. of their money up to a maximum of £15,000. Employees have been paid up to the middle of September, or the beginning of this month—I am not quite sure which—and I understand that they will receive their full redundancy payments in the near future, although complications surround that.
If there are further measures that we can take, I will be happy to listen to the hon. Gentleman's advice, but we have gone to considerable lengths to publicise the arrangements made with the other clearing banks to help former business customers of BCCI to establish alternative banking arrangements. Those arrangements have been re-publicised recently, but if the hon. Gentleman thinks that anything else can be done, I shall be happy to hear what he has to say.
§ Mr. Nelson
Is not there a strong case to be made for separating the banking supervision responsibilities from the central banking responsibilities of the Bank of England, as happens in Germany, France and Switzerland? Given the conflicts of interest that can arise between supervisor and central banker and the need to maintain the special authority of the Governor of the Bank of England, will my hon. Friend consider reviewing the decision that the Government took back in 1985—that this was not the right course of action? In the light of events, we should now consider a more fundamental restructuring.
§ Mr. Maples
Since my hon. Friend invites me to think about that, I will, but I doubt whether I shall come to a different conclusion—or whether the Chancellor will. The supervision of banks and the knowledge that the central bank has of its major bank customers from dealing with them seem to me inextricably and valuably linked. My hon. Friend quoted examples of countries with separate authorities, but there are many other countries in which 434 the authority is the same and the United States is experiencing difficulties from having had banking supervision fragmented among different authorities. There is quite a lot of advantage to be had from a central bank having supervisory powers as well.