Bank of England reveals secret rescue loans to HBOS and RBS
25 Nov 09
The Bank of England has revealed for the first time that it lent the Royal Bank of Scotland (RBS) and HBOS £61.6bn in emergency funding last autumn. Governor Mervyn King told a committee of MPs it "was to prevent a loss of confidence spreading through the financial system as a whole".
The money was repaid in full by January this year, he added.
A spokesman for the prime minister said it was "a powerful reminder" of how the banking system had nearly collapsed.
It was also revealed that Chancellor Alistair Darling had agreed to underwrite any losses which the Bank may have made on the loans.
The Liberal Democrats have called on Mr Darling to explain to the House of Commons why the Treasury guarantees were kept secret.
Vince Cable, the party's Treasury spokesman, called it a "shocking cover-up".
Shadow Chancellor George Osborne said the revelations about the secret loans showed the need to reform the system of banking regulation.
"The scale of these loans raises the question of how Labour's tripartite regulatory structure allowed these banks to come so close to collapse in the first place, and underlines the need for fundamental reform to put the Bank of England back in charge," he said.