Salmond spiv attack 'exaggerated'

The Lloyds takeover of HBOS is due to be debated in Holyrood

Doubt has been cast on First Minister Alex Salmond's claim that the short selling of shares was to blame for the impending takeover of HBOS.

Lloyds TSB unveiled a �12.2bn takeover of Britain's biggest mortgage lender after HBOS shares plummeted.

Opposition parties suggested the role played by short selling - borrowing on shares to bet on a falling market - was exaggerated.

But they still backed ministers to ensure the best deal for Scotland.

The first minister last week attacked "spivs and speculators" for targeting Scottish-based HBOS, saying it was soundly based and financial regulators should have acted to head off a speculative attack.

The concern is that resilience may now be on the line, and that concern only strengthens our resolve Alex Salmond First minister of Scotland

Speaking in parliament, Scottish Labour leader Iain Gray highlighted other issues which had hit the bank, such as its exposure to the mortgage market.

"With every day and with every commentator, it has become clearer that short selling might have exacerbated the position, but that there was a problem with the fundamentals of the bank for which those who run HBOS must take responsibility," he said.

Annabel Goldie, the Scottish Tory leader, said it was emerging that the extent of short selling of HBOS shares had been "greatly exaggerated".

"The fact is that an economy which has excessive property inflation, excessive debt, over-borrowing and a dysfunctional regulatory system is an economy with corrosive challenges," she said.

The Lib Dems' Tavish Scott said the UK Government was warned for a decade about city incentives for get-rich-quick schemes.

During this time, he said, the economy was based on ever increasing house prices that would "never fall" and would feed a credit explosion.

'Discredited' profession

"Then the music stops and look where we are," Mr Scott added.

Earlier, Mr Salmond again vowed to argue Scotland's case during the takeover talks to get the best outcome for benefits and jobs - a move which has won support from MSPs of all parties.

The Scottish Government also pointed out that UK financial watchdog, the FSA, had moved to put a temporary short selling ban in place and there had been a clampdown in the practice in several other countries.

And he told MSPs a "broad and strong" coalition was crucial to defending Scottish interests, while pointing out Scotland was showing economic "resilience" in the face of an economic slowdown.

"The concern is that resilience may now be on the line, and that concern only strengthens our resolve to get the best possible result for Scotland," he said.

Meanwhile, leading Scottish banking figure Simon Thompson said the industry must learn to lend more responsibly.

The Chartered Institute of Bankers in Scotland chief executive said the credit crunch had left the banking profession "not in credit, but discredited".

E-mail this to a friend

Printable version