Chancellor explains away £61.6bn in RBS and HBOS loans

by Gill Montia

Story link: Chancellor explains away £61.6bn in RBS and HBOS loans

The BBC has reported that Chancellor of the Exchequer, Alistair Darling, has made an emergency statement to the House of Commons regarding loans made by the Bank of England to RBS and HBOS.

The announcement follows yesterday’s revelation that the Bank propped up the two banks with £61.6 billion at the height of the financial crisis, last autumn.

However, the loans have been kept secret until now on the grounds that the UK financial sector was in no condition to deal with the news.

According to BoE Governor, Mervyn King, the action was to “prevent a loss of confidence spreading through the financial system as whole” and the debts were repaid by January of this year.

Speaking today, Mr Darling confirmed that the move had been in the public interest and at no cost to the taxpayer, BBC News said.

Financial Services Secretary, Lord Myners, has added he was fully aware of the Bank’s actions, unlike Lloyds TSB shareholders who are progressing legal action against the bank’s board at the time for a lack of due diligence in their recommendation of the disastrous takeover of HBOS by Lloyds.