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Taxpayer 'to make £30bn' from bank bailouts
31 Aug 2010
The Government will make almost £30 billion from its holdings in the banks it bailed out during the financial crisis, according to analysis published today.
The sum - enough to fund the UK's primary schools for a year - represents a dramatic turnaround from predictions at the height of the crisis that propping up the banks could cost taxpayers as much as £850 billion.
It will be achieved if equity prices rise in line with predicted economic growth over the next five years, delivering a profit of around £19 billion to the taxpayer by 2015, according to The Banker magazine.
At least a further £8 billion will be due from fees for loans, bond guarantees and the asset protection scheme the Treasury set up last year to restore confidence in banks which had seemed in danger of failing.
Lloyds paid £2.5 billion in fees to join the APS, but did not ultimately participate, while losses at RBS are unlikely to be large enough for the bank to call on the guarantee of taxpayer money, for which it has so far paid £1.4 billion.
Taxpayers are breaking even on their 83% shareholding in Royal Bank of Scotland and 41% of Lloyds TSB, when dividends and other earnings are taken into account.
Receiving a profit from the holdings would be a welcome boost for a coalition Government fighting to fill the hole in the national finances left by the banking crisis, but would also be hailed by Labour as a vindication of the strategy adopted by former prime minister Gordon Brown and his chancellor Alistair Darling in dealing with the crisis.
The Banker's editor, Brian Caplen, said: “While the banks remain at fault for decisions that led to some of them needing a rescue package, the UK taxpayer could make a significant profit from bailing out the banks by 2015.”
Reader views (16)
Dave, London: it's 30 BILLION!! Get a brain, and learn to spell (the word is "swallowed").
- Alan J, London, 31/08/2010 12:45
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Great - just as long as the banking crisis really is over, and they aren't about to lose more billions when the EU goes pear-shaped (to name just one possibility. More likely it'll be something no-one sees coming, just like before).
- Nigel, London, 31/08/2010 12:25
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What is the market value of the junk the banks dumped on the Treasury to enable new loans that haven't happened.
What we presently have are banks who are not only still underwritten by the taxpayer but have dumped garbage in exchange for cash. £30 billion spread over 6 years based on liabilities that extend to trillions seems nominal at best and a joke at worst.
All Bonus payments should be cancelled until at least £250 billion has been paid paid to HMG and the Taxpayer.
Given bonuses were worth £12 billion at least it's not a lot in realtion to the big picture but shows some making good.
If bankers can't live on basics of £100k+ then they have serious problems. The whole idea they are irreplaceable is a joke banking and trading are technically the simplest jobs to execute and training up is no problem.
- Robert Marshall, London, 31/08/2010 11:57
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Hmmmm, this "profit" will be delivered in 5 years? So how much interest will the govt have paid on money it has borrowed to fund the banks between late 2008 and 2015? What will the purchasing power of the GBP30bn be vs what the govt could have spent the money used to bail out banks in 2008 on other services? I think "Taxpayer 'to make £30bn' from bank bailouts" is possibly a little simplistic.
- Headhunter, London, 31/08/2010 11:50
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If if if...
- BJ, East London, 31/08/2010 11:39
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The taxpayer will not see a penny of this money,it will all be swalled up by MP expenses.
- dave, london, 31/08/2010 11:37
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Thirty billion, but of a massively-devalued pound. A truer picture would be to compare what the British government paid out to save the banks if it had been in U.S. dollars (at the exchange rate at the time) with the bank's present valuation in U.S. dollars. That gives a truer picture of the real change in value, worth a lot less back-slapping. The severe depreciation of the pound doesn't seem to be factored in, but has drastically reduced the buying-power of Brits offshore.
- Phil Jones, London EU, 31/08/2010 11:08
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where is this money coming from??
if the government makes money from the banks, and the banks make the money from us, the "taxpayer", isn't this essentially another tax?
- londoner, london, london, 31/08/2010 10:35
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Will we the people who have lost our money actually benefit from this... ? you know as well as I do we have the mother of all kleptocracies... would,nt it be wonderful if we had a democracy... then we could make the government accountable and fair.
- moronamid, London England, 31/08/2010 10:19
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At least its a bit of good news
- Richard, Rayleigh, 31/08/2010 10:04
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".. claiming credit for the banks bail out and the resulting profit."
- Franklin, Thornton Heath
Paying of debt is not profit. No wonder socialists bankrupt our country everytime they get a chance.
Just a drop in the Labour trillions ocean of debt.
- Frank, Home Counties, England., 31/08/2010 10:04
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So, if this is £30 Billion clear profit we can use it to pay off the huge debts Labour have racked up after 13 years in power, this should cover a fraction of them.
- Bob, Cheam, 31/08/2010 09:34
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This comes as absolutely no surprise to me.
I wonder what the anti-capitalism lot will moan about now.
- BoredofWenger, London, 31/08/2010 09:23
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Its hardly a profit when the interest payments alone on the money used to save these banks costs over £3bn a month.
- Chris, Rochester, 31/08/2010 09:09
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Does this mean our second aircraft carrier can go ahead now then? Instead of "sharing" with our traditional enemies the French?
- Lance Johnson, Canterbury, Kent, 31/08/2010 08:54
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I wonder how long it will be before the con/lib coalition government start claiming credit for the banks bail out and the resulting profit.
- Franklin, Thornton Heath, 31/08/2010 08:34
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