Bailout of UK banks with taxpayers money `justified`
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Last Updated: Sunday, December 06, 2009, 12:32
  
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 money.

"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.

PTI


First Published: Sunday, December 06, 2009, 12:32


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