London: The government bailout of British
banks in the wake of the financial crisis is "justified" and
the move has ensured that no retail depositors in the country
lost their money, says a report.
The UK government has pumped in billions of pounds of
taxpayers money to rescue many national banks including the
Royal Bank of Scotland and Lloyds from the financial turmoil.
"If the support measures had not been put in place, the
scale of the economic and social costs if one or more major
UK banks had collapsed is difficult to envision.
"The support provided to the banks was therefore
justified...," the UK National Audit Office (NAO) has said.
In its latest report, NAO noted that the UK Treasury has
helped in maintaining financial stability in the system apart
from protecting the interest of retail depositors.
"There have been no disorderly failures of UK banks, and
no retail depositor in a bank operating in the UK has lost
"The Treasury has to date achieved two of the
government`s objectives, namely maintaining financial
stability and protecting retail depositors," it said.
NAO audits the accounts of government departments,
agencies and public bodies.
UK had purchased 37 billion pounds worth of shares in RBS
and Lloyds Banking Group, in addition to insuring banking
assets worth over hundreds of billions of pounds.
The report pointed out that support measures especially
with taxpayers money has helped in improving the confidence of
the banking sector.
"Whilst the bulk support has been used to strengthen RBS
and Lloyds Banking Group, the banking sector as a whole has to
date benefited from improved confidence," the NAO said.
Regarding the likely cost of these initiatives for the
taxpayers, the report noted it would primarily depend on the
scale of any losses arising from the Asset Protection Scheme,
and prices at which the government`s holdings in RBS and
Lloyds would be disposed.
Earlier, the UK Treasury had estimated that the final net
cost to the taxpayers might be in the range of 20 to 50
billion pounds, depending on the length and depth of the
economic recession and the strength of any recovery.