Morning:
10°c
Rescue loans for banks topped £61bn
24 Nov 2009- Cameron urges voters to keep Union
- Tribute paid to teenage stab victim
- Teenager faces jail for riot attack
- Ailing Rangers 'attracts interest'
- No assurances offered over Qatada
- Judge jails 'evil' killer for life
- Underwear bomber jailed for life
- EU seeks to defuse Greek debt row
- MMR row doctor decision 'fair'
- Strike ballot challenge dismissed
Emergency loans to Royal Bank of Scotland (RBS) and HBOS peaked at £61.6 billion at the height of the financial crisis, the Bank of England has said.
The Bank revealed for the first time the details of its Emergency Liquidity Assistance (ELA) to both banks in a submission to the Treasury Select Committee.
The duo put up collateral worth more than £100 billion in return for the loans as the financial system was rocked by the failure of Lehman Brothers.
The combined borrowings of both banks - which were charged a fee for the facilities - peaked on October 17 last year, the Bank said.
RBS is now 84% owned by the state following last year's bail-out and the bank's participation in a taxpayer-backed insurance scheme for toxic loans. HBOS was rescued from nationalisation by Lloyds TSB, but the Government took a 43% stake in the combined group as it pumped in cash amid soaring bad debts.
While support for RBS peaked at £36.6 billion on October 17, HBOS borrowed £25.4 billion on November 13 when then-chairman Dennis Stevenson was appealing to the bank's shareholders to back the Lloyds deal.
The Bank decided to reveal the figures since the danger of immediate collapse had passed with huge potential consequences for the financial system.
Bank governor Mervyn King told MPs that following the "extraordinary" events of the past year, "it is right that households and companies expect fundamental reform to the structure and regulation of our whole financial system".
While Mr King said he was "encouraged by signs that a recovery will soon be under way", he warned the economy still faced "profound challenges". Around 5% to 10% of the UK's entire economic output - around £100 billion - has been lost "for an indefinite period", he said.
The governor also warned that lingering banking sector problems would cut credit to households, while worries over unemployment and the need to address the stretched public finances with tax rises or spending cuts would hit spending levels for a "considerable period".
Reader views (2)
I wonder how much they plundered from the pension fund ?
- N.Martin, UK, 24/11/2009 12:51
Report abuse
£61.6 BILLION to prop up the banks.
£2 MILLION to prop up the devastated peeps in Cumbria.
- Reuben Camara, Plot 1, Morecambe Compound, EUSSR, 24/11/2009 12:09
Report abuse
