Business banking news review: week ending 29 May 2014
The mass exodus from High Street banks has begun, and the nation’s mutuals and building societies are benefiting – but possible disaster looms on the horizon.
Nationwide, the UK’s largest mutual, has recently said that it’s been welcoming a massive number of new personal and business bank account holders right now – something like 1,000 a day – with a massive 430,000 new accounts opened over the last 12 months. Nationwide’s newest deal is most likely a large part of this activity, as it has a current account offering a massive 5 per cent interest rate, but it’s more than that; industry experts predict that savers are tired of High Street banks and their seemingly unending string of scandals.
This is of course even more bad news for banks such as Lloyds TSB and RBS which have already had to deal with all sorts of bad news lately. For what it’s worth I’m glad to see savers actually voting with their money and switching up their banking providers – it means that these banks will possibly finally get the message that they can’t treat their customers like rubbish and expect them to stick around indefinitely!
However, even with this wonderful news (well, wonderful for Nationwide and its new customers anyway) there’s one little niggling detail that’s got financial experts worried. There’s the possibility of a debilitating bank run if Scotland’s independence referendum is successful, as the formation of a new Scottish currency could spark fears of devaluation against the British pound.
It would take a massive co-ordination between London and Edinburgh to not turn the whole thing into an incredibly complex and financially damaging mess. Already there are people smarter than me working on it, but it’s certainly a sticky wicket. I don’t know what in the world could possibly be done to avoid such a fate short of the referendum failing and Scotland remaining within the UK, though. I suppose we’ll have to take a wait and see approach – and I’m certainly not telling anyone to go withdraw any cash they have being held in a Scottish bank and re-depositing it in one on English soil. The whole idea is to avoid such a fate, not encourage one!