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Banks: Don't panic!

• Robert Peston
• 19 Mar 08, 11:14 AM

The governor of the is meeting the chief executives or our biggest banks tomorrow.

They will discuss the desire of the banks for the Bank of England to lend them more money for longer periods and against the security of a wider range of collateral (especially mortgages).

The intention would be to reassure creditors and investors that there is not the faintest chance of any British bank suffering a .

It's perfectly sensible for the discussion to take place. And it will be interesting to see whether the Bank of England now feels it can provide additional three-month, six-month and even 12-month money.

However the fact of the looming meeting appears to have prompted hysteria in the stock market.

Wild rumours have circulated about and both facing funding crises. HBOS's share price dropped an astonishing 20% at one stage.

The speculation is crazy. I have checked - and neither HBOS nor Lloyds are in that kind of trouble. They both have ample liquid resources.

So ignore the scaremongers - who may well be motivated by the desire to cash in by shorting the shares of vulnerable banks.

Though don't assume that the banking system is in the finest of fettle. The basic issue of how to restore confidence that all our leading banks have sufficient access to liquid funds is a real and urgent one.

So let's hope tomorrow's meeting between their chief executives and Mervyn King is a constructive one.

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Next versus Treasury

• Robert Peston
• 19 Mar 08, 08:23 AM

This statement in Next鈥檚 caught my eye this morning:

鈥淭rading conditions in the year ahead will continue to be difficult as increased costs and rising taxes put pressure on our customers.鈥�

Or to put it another way, the chairman of Next, John Barton, seems to be heaping responsibility on the chancellor for the slowdown on the high street.

Now you may think there鈥檚 nothing terribly remarkable about that. After all, Next鈥檚 chief executive, Simon Wolfson, is matey with the new generation at the top of the Conservative party and there was a tax-raising Budget last week.

But the typical rule at publicly listed companies is that they don鈥檛 dump on the incumbent government for stewardship of the economy 鈥� usually because those companies think it鈥檚 sensible to be on reasonable terms with those who have the power. Cohabitation with ministers is unavoidable and shareholders get a bit antsy if that cohabitation becomes fractious.

There is an exception to that rule. If the prevailing wind becomes so strong against a ruling party, then businessmen often rediscover their critical voice.

So it will worry Gordon Brown and Alistair Darling that Next has piped up. And they鈥檒l be fearful that other listed companies will join in the chorus of implicit criticism.

Also, Brown and Darling won鈥檛 welcome 鈥檚 threat to relocate some of his private-equity operation abroad, which he .

Hands believes that Darling鈥檚 changes to capital gains tax and the taxation of non-doms are damaging his industry.

But the political significance of Hands鈥檚 remarks is a little bit less than those of Next.

Privately owned businesses, like Terra Firma, have always found it easier to put the boot in to politicians.

They can say more-or-less what they like, because they鈥檙e not answerable to pension-fund shareholders and the millions of pensioners who depend on those funds.

By the way, Next鈥檚 shareholders might want to ask the retailers鈥� directors whether last year鈥檚 fall in sales at Next鈥檚 existing stores was all the fault of the government, or whether management shares some of the responsibility.

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