Does the government have a conflict of interests with regards to the UK banking sector?
As the UK government, and many other private and public bodies, continue to attack the UK banking sector there is concern that this constant pressure could have a detrimental impact on the value of UK taxpayer shareholdings in the likes of Lloyds Bank and Royal Bank of Scotland. Despite the fact that the shareholdings have been placed within a third-party company to try and alleviate any potential conflict of interest, is this working?
There is no doubt that even if Lloyds Bank and Royal Bank of Scotland have been left behind with regard to the recent banking recovery the share price of the companies will suffer in line with the overall banking sector. Any increase in taxes for the banking arena would reduce money available to invest in services and will ultimately reduce the competitiveness of the UK marketplace. Reduced competitiveness may well see the likes of Lloyds Bank and Royal Bank of Scotland suffer from reduced profitability and indeed consumers and businesses will also suffer if there is reduced competition.
As a consequence it is highly likely that the UK government will look to dispose of share stakes in Lloyds Bank and Royal Bank of Scotland as soon as possible thereby eliminating any future conflict of interest and also "putting to bed" the actions of the previous government.
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