UK News
Insights from the UK and beyond
Too big to fail? Guerrilla central banking and the last resort
Deciding it was safe to come clean because banks are now on a more even keel and the worst of the credit crisis is behind us, the Bank of England has told the nation that at the height of the turmoil it secretly lent Royal Bank of Scotland and HBOS a colossal £62 billion, which is more than the entire British defence budget.
Both banks faced the imminent closure of high street cash machines and the curtailment of normal banking operations across the country.
The Bank said “this was a dire emergency” and Downing Street called the secret lending of taxpayers’ money in the Autumn of 2008 “a powerful reminder of how close the banking system came to near collapse.”
In Westminster, some MPs were flabbergasted, even though the loans have now been repaid.
Should banks sponsor sports stars?
A bit like asking turkeys to vote for Christmas, parliamentarian John Mann has called on the likes of tennis player Andy Murray, equestrian star Zara Phillips and motor racing great Sir Jackie Stewart to scrap their sponsorship contracts with the Royal Bank of Scotland.
Bleeding red all over its accounts and shedding thousands of jobs, the struggling Scottish bank has been heavily criticised for doling out bonus payments to staff despite receiving billions of pounds of state aid.
The “shotgun wedding” of Lloyds and HBOS
“If you think you want to advance on this, we will deal with the competition issues” — so said Gordon Brown to Lloyds Chairman Sir Victor Blank last September, sweeping away the one big problem to a merger between Lloyds and HBOS.
At the time, Brown said the government had acted quickly and decisively in removing competition concerns and prodding the merger forward, despite concerns about the risk that Lloyds was taking.
Brown’s Scotland likely to be hit worst in recession
The Labour Party may have won the Glenrothes by-election this week, partly on the back of the Prime Minister’s handling of the financial crisis, but Gordon Brown’s Scotland is predicted to suffer more than the rest of Britain during the economic downturn.
Scotland was named European Region of the Future for the second time in four years by the Financial Times’ fDi (foreign direct investment) magazine this year.
Turbulence or meltdown?
*** For full coverage of the financial crisis click here***
The events of the last five days have been traumatic for the world of high finance and banking — and may yet become so for the man in the street if confidence in banks fails to hold.
Venerable finance houses are falling like cards, all manner of exotic and unsound practices are being revealed and many of the old rules — like the competition reugulations that stopped Lloyds buying Abbey National in 2001 — have gone out of the window.
-
The Wall
