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Reply #51: British banks could ask taxpayers for more cash [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-02-11 09:09 AM
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51. British banks could ask taxpayers for more cash

Warning that the cost of borrowing is set to soar and "given the current exceptionally threatening environment", the Bank of England's Financial Policy Committee (FPC) instructed lenders to "limit distributions" code for bonuses and dividends.

It also urged them to "give serious consideration to raising external capital in the coming months" a move that would either require the taxpayer to inject more money into the banks or dilute the Governments' stakes, making it more difficult to recover the 66bn invested in Royal Bank of Scotland (RBS) and Lloyds Banking Group.

Coming the day after central banks across the world took desperate co-ordinated action to ensure European lenders can secure the funding needed to survive, Sir Mervyn King, the Bank's Governor, confirmed that there are "signs of a credit crunch already in the euro area".

He added: "I don't think that's begun yet, but you can see how it would come through here if funding costs were to continue to be as high as they are."
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