by Andrew Redfern @ 9th April 2009 9:35 am

One of Britain’s smallest but strongest banks has issued a scathing attack on the way the Government has handled the banking crisis.

Secure Trust Bank, based in the Midlands, has launched an online campaign urging the Government and the FSA to develop a new banking system. Chief Executive Gary Jennison said that the excessive risk-taking  of the banks in recent years was inexcusable, but that rather than seeking to apportion blame, people needed to focus on a solution.

He believes some or all of the failed banks should have been broken up rather than bailed out, with a new banking system formed, and that t he UK needs more banking competition - exactly the opposite of what the Government has done in submerging HBOS, Bradford & Bingley, Alliance & Leicester and Northern Rock into bigger banks or indeed directly owned by the Government.

He said: “The Government should have either let some of these go to the wall, or break them up into smaller, more manageable units. That goes too for the six building societies which have had to be bailed out in the last year. Building societies are supposed to be safe and secure, yet these guilty ones have strayed too far from their core business into areas they didn’t understand

“Quite simply, modern banking has become too complicated and there is a real need for highly disciplined retail banks to emerge. Retail deposits should not be used to fund investment banking activities with their casino trading mindset.

What went wrong with the banks is simple to see. Nobody really understood just what bonus-driven investment bankers were up to. They were allowed to run riot with the balance sheet strength of commercial banks behind them. It was just like children being let loose in a sweetie shop,” he added.

The video footage, being spread across the net through YouTube and micro-blogging service Twitter, reminds people of the extent of the damage, and Mr Jennison is very clear on where he believes the problem began. He claims that former US President Clinton’s decision to repeal the Glass Steagall Act 1933 and allow Citibank and the Travellers Group to merge in 1999 kickstarted the enormous boom in sophisticated financial instruments which very few people understood and which arguably has led to the current global financial crisis.

Mr Jennison said of the current UK crisis: “RBS and Lloyds have dumped £585billion of toxic assets and the UK tax-payer is bailing them out. That is more than the Chancellor will be able to raise this year through taxes, national insurance, rates and excise duty. How on earth can we afford to bail out the banks?

“The Government should have had the courage to let some of them go to the wall,” he said.
Mr Jennison made the decision to broadcast his opinions as public opinion of the banking industry plummeted.

“Things have gone very, very wrong, but it’s more important to put them right than to point fingers and apportion blame,” he said. “I’m fed up of the media hounding former banking chiefs - let’s move on into more productive activities”

“People are angry. I don’t blame them, it is the tax-payer having to fund this bail out and I’m one of them. I’m angry too.  But people are jumping to conclusions that everyone in the banking industry is responsible. Not true .

Secure Trust Bank has grown steadily over the past 50 years to become a strongly-capitalised, reliable and profitable bank. There is no danger of us ever falling into the abyss the way that other banks have because we acknowledge that investment and retail banks are two different things and shouldn’t be combined,” he added. Their problems have come about because of excessive risk-taking, chasing attractive short-term rewards.

“That’s why I’ve launched this campaign. Banking is getting some bad PR right now and I don’t want all banks tarred with the same brush. I don’t approve of the risks that some individuals have taken, and I don’t want people assuming that by default, all banks are financially stretched.

“The comments doing the rounds are my own, but I’m speaking as a responsible businessman as well as an angry tax-payer. It is  possible to be both.”

More information goto http://www.securetrustbank.com/press.htm

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