Skip to main content

Banks: Loans

Volume 489: debated on Tuesday 10 March 2009

To ask the Chancellor of the Exchequer what steps he is taking to ensure that banks in receipt of public money maintain their lending on mortgages and to businesses at 2007 levels; and if he will make a statement. (261649)

On 8 October 2008 the Government announced measures to support the stability of the financial system, protect ordinary savers, depositors, businesses and borrowers, and to safeguard the interests of the taxpayer. Details are available at:

As part of their investment, the Government have agreed with the banks supported by the recapitalisation scheme a range of commitments. These include agreements to maintain, over the next three years, the availability and active marketing of competitively-priced lending to home owners and small businesses at 2007 levels.

The Government's shareholdings in the banks supported by the recapitalisation scheme will be managed on a commercial basis by an arm's length company, UK Financial Investments Ltd. (UKFI). UKFI's objective is to protect and create value for the taxpayer as shareholder with due regard to the maintenance of financial stability and to act in a way that promotes competition.

On 19 January 2009, the Government announced further measures 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. These build on the measures announced on 8 October last year. Further information is available at:

The Government will negotiate quantified lending agreements with the banks participating in the Asset Protection Scheme and extended Credit Guarantee Scheme as announced in January this year. As the Chancellor set out on 26 February in his statement to Parliament, Royal Bank of Scotland has agreed a lending agreement with the Government.

The Government will report to Parliament annually on the delivery of these agreements.