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‘Deeply troubling’: Now Scotland hits out over Macquarie Bank deal

Scotland’s Cabinet Secretary for Economy Jobs and Fair Work Keith Brown has joined the chorus of politicians voicing concerns over Macquarie Bank’s takeover plans. Photo: supplied Macquarie Bank is causing alarm in Britain over its proposed takeover of the UK’s Green Investment Bank. Photo: Grant Turner
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The Scottish government has added to concerns being voiced about Macquarie Bank potentially “asset stripping” Britain’s prized Green Investment Bank if the n investment bank is successful in acquiring the bank, possibly as early as next month.

The Scottish government’s Cabinet Secretary for Economy Jobs and Fair Work Keith Brown has written to the UK government, warning that privatising the bank “may result in an asset stripping exercise.”

His concerns mean serving and former MPs from five political parties have sounded alarm at the prospect of the so-called “Millionaires Factory” taking over the Green Bank.

Although Mr Brown’s statement does not mention Macquarie Bank by name, it is the only serious contender to buy up the £2 billion ($3.4 billion) bank.

“I have been made aware of some concerning reports that the privatisation has become more of a fragmentation or asset stripping process which runs counter to the previous commitments made to the Scottish Government,” Mr Brown said.

“This is deeply troubling considering the vital role that the bank serves in our green economy.”

“The veiled manner in which privatisation is taking place offers no reassurance that the future of the Green Investment Bank is being modelled in line with the reassurances offered to the Scottish Government in 2015, which state that the original purpose of the bank would be maintained.” ‘Financial asset stripper’

The term “asset stripping” means breaking up a company and selling off its most profitable parts, even if that is not in the company’s long-term interests. Critics of the sale fear Macquarie Bank will break up the Green Bank in this way and rob it of its ability to act with an environmental mission.

Macquarie Bank has been hit with the unflattering “asset stripping” tag for more than a decade, when the board of the London Stock Exchange deemed the bank unfit for a takeover.  Britain’s Telegraph cited a source close to the LSE describing Macquarie Bank as “purely a financial asset stripper.”

The SNP’s intervention is significant as it has previously suggested the British government might have to formally seek Scotland’s approval for any privatisation deal. The Green Investment Bank was created in 2012 to finance infrastructure green energy projects would otherwise struggle to find.  In 2015 it began turning a profit. Its headquarters are located in Edinburgh.

Mr Brown’s statement adds to concerns raised in the past few weeks by MPs from a range of political parties, including the former Tory and Liberal Democrat Ministers who helped create the bank, the Labour opposition and the Greens.  Former Tory Minister Gregory Barker called for the sale to be halted immediately and the former Lib-Dem Secretary Vince Cable last week told Fairfax Media that Macquarie Bank was the “worst kind of company” to be acquiring a bank set up to solely finance environmental projects. 

Former Liberal Democrat MP and secretary of state for business Sir Vince Cable. Photo: Supplied

Bloomberg has reported the British government could be ready to sign off on a deal with Macquarie as early as January.

The Tory government first proposed privatising the bank when it was led by David Cameron. The then Chancellor of the Exchequer George Osborne announced the bank and a total £5 billion worth of assets would be put up for sale as a way of reducing Britain’s debt.

But the process of privatising the bank, which was supposed to have been completed by 2016, has already been delayed. That has sparked hopes amongst sources opposing the privatisation that under Prime Minister Theresa May the government may no longer be as politically committed to the GIB’s sale.

Former prime minister David Cameron with the then chancellor of the exchequer George Osborne earlier in 2016. Photo: Getty Images

Prime Minister May has already shelved George Osborne’s goal of eliminating the budget deficit by 2020. And in September, the government quietly postponed another of George Osborne’s privatisation plans – the sale of the Land Registry.

Macquarie Bank says it will not be commenting on the issue.

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