BoE made secret loans of £61.6bn to RBS and HBOS

by Gill Montia

Story link: BoE made secret loans of £61.6bn to RBS and HBOS

At the height of the financial crisis the Bank of England was forced to prop up Royal Bank of Scotland (RBS) and HBOS with loans totalling £61.6 billion.

The emergency funding was needed during October and November of 2008 to maintain the stability of the UK financial system and “prevent a loss of confidence spreading through the financial system as whole”.

According to BoE Governor, Mervy King, the money was repaid in full by January 2009.

The radical action has been kept secret until today when MPs questioned Mr King and he explained that the Bank was acting in its role of lender of last resort.

RBS went on to become over 70% state owned, having signed up for the Government’s Asset Protection Scheme (APS).

The 43% state-owned Lloyds Banking Group, which now includes HBOS, is in the process of raising £22.5 billion fund raising to avoid participation in the APS.

The group has launched a £13.5 billion rights issue, with the new stock priced at 37p.