Alastair Darling's announcement that government stakes in UK banks, including Northern Rock, Lloyds Banking Group and Royal Bank of Scotland, would not be sold to banks with big existing operations in the UK is worrying on many fronts.
The chancellor told a CBI dinner in Glasgow that as the government scales back and ultimately removes support in the banking sector, it would do so in a way “that proactively encourages new entrants”.
On the purely economic front, there is the simple fact that the more constraints are placed on the domain of projective purchasers, the more the objective (the maximisation of the realisation price) is likely to be limited (see George Dantzig:1953. Notes on linear programming. Rand Corporation.)
More importantly, since the likely new entrant is a former rock promoter and condom salesman in a woolly jumper, an equally woolly beard and a toothy grin, one wonders how the Geordie Footballers, Real Hard Men par excellance, will take to wearing logos thet proclaim their chastity.