2008 United Kingdom bank rescue package

rdf:langString 2008 United Kingdom bank rescue package

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rdf:langString [The banks] did have a lot of questions and they wanted to understand the fine detail. It was obvious that they wanted the government guarantee to underpin their lending and to expand the special liquidity scheme, but they were less keen on raising capital. I said they could not have the one without the other. I said, we proposed to make available £50 billion. The FSA would decide how much each bank needed to raise. They would then have a choice: they could raise it themselves on the markets, or if they couldn't, we would provide it in return for a shareholding. Alistair Darling Chancellor of the Exchequer 2007-2010 “Back from the brink” 2011

rdf:langString In the period September 2007 to December 2009, during the events now widely known as the Global Financial Crisis, the UK government enacted a number of financial interventions in support of the UK banking sector and four UK banks in particular. At peak, the cash cost of these interventions was £137 billion, paid to the banks in the form of loans and new capital. Most of this outlay has been recouped over the years. As at October 2021, the UK Office for Budget Responsibility reported the cost of these interventions as £33 billion, comprising a loss of £35.5 billion on the NatWest (formerly Royal Bank of Scotland) rescue, offset by some net gains elsewhere. The first public indication of the crisis was in July 2007, when two Bear Stearns hedge funds became insolvent. This initiated a series of global events that led to the seizure of interbank credit markets. The UK retail bank Northern Rock, which relied heavily on short term funding, sought emergency assistance from the Bank of England. When this arrangement was publicised, the bank experienced the first run on a British bank in 150 years. In news reported around the world, customers of the bank were shown queuing outside branches to withdraw their deposits. In an effort to stop the panic, on 17 September 2007, the then UK Chancellor of the Exchequer, Alistair Darling, announced the government would guarantee all Northern Rock deposits. From September 2007 to December 2009, the UK Government made further interventions to support the banking sector, and specifically to RBS (now NatWest), Lloyds Banking Group (LBG), Bradford & Bingley as well as Northern Rock. Northern Rock and Bradford & Bingley were both taken into full public ownership; RBS was taken into majority public ownership; and the government took a minority stake in LBG. In addition to cash support, the UK government enacted a number of other schemes involving financial guarantees with the aim of restoring confidence in the banking sector. These were contingent liabilities that did not involve cash outlays. The National Audit Office (NAO) estimated that total guarantees added up to over £1 trillion at peak support. As these guarantees were gradually withdrawn or expired, the outstanding sum under guarantee stood at £14 billion as at 31 March 2018. Subsequently, broadly similar measures were introduced by the United States and the European Union in response to the financial crisis.