In 2004, Gordon Brown, Britain's Labour Chancellor at the time, officially opened the offices of Lehman Bros' in London with the words: "Lehman brothers is a great company that can look backwards with pride and look forwards with hope." Four years later the bank went bust, triggering a global financial meltdown. 

Sadly, ten years on, not much has changed in Britain's banking system. It remains a hotbed of speculation and tax evasion, as it mainly serves rich investors and private corporations. Before 2008 – a wild credit boom, the sub-prime mortgage crisis, and "toxic" derivatives among other issues exposed the true character of Britain's private banks.

Although massive state bailouts after 2008 saved the banks, they just carried on as before. For example, Sir Fred Goodwin, who ran RBS, Britain's largest bank, was knighted for his "services to the banking industry" at the behest of the then Labour government. He bullied his staff, made reckless gambles, and awarded huge bonuses. Then, after driving RBS to the point of bankruptcy, he got a huge pay out from the RBS board. This story was repeated in other scandal-ridden banks when their senior executives "stepped down."

RBS was also involved in the notorious Libor-rate rigging scandal, where bank traders colluded to fix the interest rate for inter-bank lending, which happened even after RBS was partly nationalized. Libor sets the floor for most loan costs across the world. As a consequence, local authorities, charities and businesses ended up paying billions more than they should for loans. The new CEO of RBS Stephen Hester took the helm after the crash, but two years after his appointment, Libor traders at RBS continued to rig the rate even though it was illegal.

Britain's next biggest bank, Lloyds Bank, was also part nationalized. Lloyds took over the scandal ridden Bank of Scotland during the crash, and along with the other banks had to compensate customers for miss-selling personal injury insurance to the tune of ￡5 billion.

Bob Diamond ran Barclays Bank in 2008, when Barclays was threatened with partial nationalization. So, the company board, loaned money to Qatar, who then invested in stock of the bank to the tune of ￡12bn. In this way, the bank avoided state control by issuing loans for equity. However, it remains unclear what "commissions" were paid to these Qatari investors.

Then there is HSBC. In the U.S., HSBC was fined $5bn by the Federal authorities for "laundering" money for Mexican drug cartels. In Switzerland, the former chairman of HSBC, Stephen Green, claimed to be doing "God's work." Indeed, Green is an ordained vicar, and he published an essay in 2009 about how to promote "corporate responsibility and high ethical standards in the age of globalization." Meanwhile, HSBC's Swiss division was busy concealing the ill-gotten gains of the super-rich. It recycled their cash back to the U.K. and other countries in ways that avoided paying tax.

Indeed, nowadays, tax evasion is central to the mission of unaccountable privately-owned banks. They act as the agents of wealthy individuals and corporations. The latest scandal emerging concerns Danske Bank, Denmark's largest. From 2008 to 2015, Danske's Estonian branch laundered over $200bn of Russian and British corporate cash, to avoid tax. U.K. corporate entities were its second-biggest group of customers after the Russians. There were 15,000 non-resident customers at the Estonian branch of Danske making this one of the biggest money-laundering scandals ever. 

A genuine banking service should take deposits, look after savings, and offer loans to households and small businesses for big-ticket items at reasonable interest rates. However, the current capitalist banking system is mainly interested in speculating in financial markets for quick returns, arranging corporate finance deals, and assisting tax avoidance; while top executives are given astronomical rewards.

Britain's banks fail to do even the basics properly because they do not spend enough on staff and systems. For example, the outages and failures in Internet banking. As the current Conservative minister, Nicky Morgan put it: "It simply isn't good enough to expose customers to IT failures, including delays in paying bills and an inability to access their own money. High street banks justify the closure of their branch networks on the basis that they are providing a seamless online and mobile phone banking service. These justifications carry little weight if their banking apps and websites cannot be relied upon."

Capitalist philosophy is founded on the dogma, "private good, public bad." It is a false theory. For example, in North Dakota in the USA, the main bank has been publicly owned since the Great Depression. It looks after the deposits of customers and provides loans for households and farmers; any profit it makes goes back to the state government. It does not engage in speculation or money laundering. And it did not suffer during the global crash.

China's state-owned banks provide credit to support local and national investment programs that have revolutionized China's infrastructure over the last two decades. And through the Belt and Road Initiative, the benefits of this will soon reach much of the world. China's cities, roads, ports, airports, railways, schools, colleges, and housing stock, have been modernized in ways that dramatically improved the lives of hundreds of millions of its people. None of this would have been possible if China's banks had been dominated by private interests. 

Many people in the British Labour movement argue for banking diversification in the form of regional banks, coops and credit unions. Such a banking system exists in Germany, which is predominantly state-owned at the regional level, and where there are many savings and development banks. And it is true that if the major banks in Britain were taken into public ownership they could link up with such regional and local banks. But, this could only work if the core of the banking system is in public hands. If "diversification" means keeping the big five banks in private ownership then the small banks and credit unions will inevitably play a subordinate role to private interests. Therefore, nothing of substance will change.  

Unfortunately, inside the British Labour Party an irrational fear of taking the major banks into public ownership exists. However, there is no reason for the Labour Party to restrict its ambition for public ownership to the railways, energy and water. The reticence seems to be rooted in fear of the media and response by the City of London. Nevertheless, breaking up the banks, taxing them, and giving workers shares, which Labour's shadow chancellor John McDonnell proposed at the Labour Party conference, will definitely provoke the ferocious antagonism of big business – but it will not transform banking into a public service capable of driving productive investment to implement Labour's Manifesto objectives. 

Heiko Khoo is a columnist with China.org.cn. For more information please visit: 

http://china.org.cn/opinion/heikokhoo.htm

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.