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State backed banks accused of offering poor rates

The likes of Lloyds Bank and Royal Bank of Scotland today stand accused of offering very disappointing rates to UK savers and less than competitive rates to UK borrowers. This will dismay the UK government at a time when the UK economy needs further liquidity and UK consumers are crying out for more help. We have seen businesses and families struggling to make ends meet, and this is sure to have an impact upon the short to medium term strength of the economic recovery.

However, in many ways the state-controlled banks are in a no-win situation because if they charge competitive rates they could stand accused of taking advantage of their position and if they charge poor rates they stand accused of not being competitive. The truth is that until these state backed banks are returned to the public arena there will always be a degree of conflict of interest whether they are too competitive or not competitive enough.

It is difficult, if not impossible, to estimate when the UK government may be in a position to dispose of its significant shareholdings in Royal Bank of Scotland and Lloyds Bank but one thing is for sure it will not be before the next general election. Ironically, Gordon Brown may have made the best investments of his life in Royal Bank of Scotland and Lloyds Bank but may not be around to take the credit when the shares are finally sold.

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