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Britain’s banking system was hours from collapse says minister

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by Kay Mitchell

One of Gordon Brown’s Ministers has revealed that the British banking system was just hours from collapse, just before the Government’s £500 billion bailout of the British bank system last October.

In an interview with the Times, Lord Myners, who was appointed Financial Services Secretary to the Treasury in October to help rescue the banking system, said that the country was three hours away from a complete banking collapse after ‘major depositors’ were ready to withdraw their money from a number of large banks.

According to the Mail on Sunday, behind-the-scenes attempts prevented financial meltdown.

However, Lord Myners has been criticised for admitting the sheer scale of the crisis at a time when major British banks are seeing their share price fall amid rumours of nationalisation.

Angela Knight, chief executive of the British Bankers Association, said that it was only HBOS and RBS that these issues related to. To suggest that all banks would have collapsed is wrong, said Ms Knight.

Meanwhile, Lord Myners has also revealed that some bank executives have been “grossly over-rewarded” and have no sense of the society around them.

The revelation comes despite Gordon Brown’s assurance that the days of huge bonuses are over after top execs are set to receive bonuses and shares worth up to £5 million each.

Last week, it was announced that nationalised Northern Rock has paid almost all of its 4,500 employees a 10% bonus – an average of £2,000 each.

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News posted: January 25, 2009

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