Bank of England reveals loans
By Adrian Croft |
November 25, 2009, Wednesday
|
Print Edition
Print Edition
THE Bank of England disclosed yesterday that it provided more than 60 billion pounds (US$99.4 billion) in emergency loans to RBS and HBOS at the height of the credit crisis last year.
The British central bank did not give details of the loans in its annual report published in May because of fears of its impact on confidence in the banking system. However, it said it now felt there was no longer any need for secrecy, with the two banks on a sounder financial footing.
"This was a dire emergency," Bank of England Deputy Governor Paul Tucker told parliament's Treasury committee.
The banks provided collateral in the form of residential mortgages, personal and commercial loans and UK government-issued debt with a total value in excess of 100 billion pounds. They have both repaid the emergency loans.
"In exceptional circumstances, as part of its central banking functions, the Bank acts as ?lender of last resort' to financial institutions in difficulty in order to prevent a loss of confidence spreading through the financial system as a whole," the Bank said in a statement to the committee.
"Accordingly, the bank extended emergency liquidity assistance to two institutions, RBS and HBOS, in the autumn of 2008," the Bank said.
The British central bank did not give details of the loans in its annual report published in May because of fears of its impact on confidence in the banking system. However, it said it now felt there was no longer any need for secrecy, with the two banks on a sounder financial footing.
"This was a dire emergency," Bank of England Deputy Governor Paul Tucker told parliament's Treasury committee.
The banks provided collateral in the form of residential mortgages, personal and commercial loans and UK government-issued debt with a total value in excess of 100 billion pounds. They have both repaid the emergency loans.
"In exceptional circumstances, as part of its central banking functions, the Bank acts as ?lender of last resort' to financial institutions in difficulty in order to prevent a loss of confidence spreading through the financial system as a whole," the Bank said in a statement to the committee.
"Accordingly, the bank extended emergency liquidity assistance to two institutions, RBS and HBOS, in the autumn of 2008," the Bank said.
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