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13 October 2008

HM Treasury statement on financial support to the banking industry


The UK Government is making capital investments to RBS, and upon successful merger, HBOS and Lloyds TSB, totaling £37 billion, underlining that Government is not a permanent investor in UK banks.

The UK Government is making capital investments to RBS, and upon successful merger, HBOS and Lloyds TSB, totaling £37 billion, underlining that Government is not a permanent investor in UK banks. Following the completion of these capital investments, each of the above institutions will have a Tier 1 capital ratio in excess of 9%, well above international minimum standards

 

As part of its investment, the Government has agreed with the banks supported by the recapitalisation scheme a range of commitments covering:

  • maintaining, over the next three years, the availability and active marketing of competitively-priced lending to homeowners and to small businesses at 2007 levels;
  • support for schemes to help people struggling with mortgage payments to stay in their homes, and to support the expansion of financial capability initiatives;
  • remuneration of senior executives - both for 2008  and for remuneration policy going forward;
  • the right for the Government to agree with boards the appointment of new independent non-executive directors; and
  • dividend policy.

 

The Government intends to create a new arms length body to manage the Government's shareholdings in recapitalised institutions on a professional and wholly commercial basis,

 

HM Treasury statement

The UK Government's 2008 Credit Guarantee Scheme

UK Bank Re-capitalisation: Revision to DMO Financing Remit 2008-09

 



© HM Treasury


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