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Banks: Government Assistance

Volume 488: debated on Tuesday 24 February 2009

To ask the Chancellor of the Exchequer how much the Government has spent on (a) equity, (b) preference shares, (c) loans, (d) guarantees and (e) other financial support to each bank for which it has provided support. (254946)

Under the recapitalisation scheme announced on 8 October 2008, the Government have invested £19.97 billion in RBS and £16.96 billion in Lloyds TSB/HBOS. These banks are also eligible to use the Government’s Credit Guarantee Scheme (CGS), under which up to £250 billion of bank lending will be guaranteed. Participating banks have accessed some £100 billion of funding under the CGS so far. Figures for individual banks are confidential.

On 19 January, the Government announced a comprehensive package designed to reinforce the stability of the financial system, to increase confidence and capacity to lend, and in turn to support the recovery of the economy. The liabilities taken on will be backed by financial assets and fees will be charged for guarantees, safeguarding the taxpayers’ interests. For more details, I refer the hon. Member to the statement made by the Chancellor on 19 January 2009, Official Report, columns 483-86.

As set out in written ministerial statements dated 13 October and 6 November, the Government have made payments totalling £5.4 billion to retail depositors in Bradford and Bingley (B and B) and UK subsidiaries of Icelandic banks covering deposits above Financial Services Compensation Scheme (FSCS) limits. These written statements and a Treasury Minute dated 21 October 2008 gave details of the short-term loan facilities provided by the Bank of England to the FSCS to cover their share of payouts to retail depositors in these banks. As set out in the pre-Budget report, the Government are refinancing £21 billion of these Bank of England loans to the FSCS in 2008-09.

In addition the gross amount outstanding on the Government’s loan to Northern Rock is projected to be £12.2 billion at 31 March 2009.