Report finds bank bailouts were ‘justified’
According to a review by the National Audit Office (NAO), the cost of propping up the UK’s failing banks was ‘justified’.
The report by the NAO found that the cost of bailing out UK banks has hit £850 billion but the report concluded that the end result of protecting customers’ money and restoring financial stability had been achieved.
Amyas Morse, head of the NAO, comments: “It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse.
“The Treasury was justified in using taxpayers’ money to safeguard savings and stabilise and restore confidence in the financial system,” said Mr Morse.
“It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse.
“As the crisis begins to subside, lessons must start to be learned. The authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers,” added Mr Morse.
In the meantime, the report also found that more than £100 million was spent on crisis advisers.
However, despite the injections of cash into banks such as Lloyds and Royal Bank of Scotland, it has emerged that bank lending to businesses has not been achieved.
According to NAO, while both banking giants are on target for mortgage lending, they are unlikely to meet their 2009/10 business lending targets – one of the terms of their rescue deals.
The report comes as the subject of bonuses among the UK banks rears its ugly head again. Yesterday, the board of the Royal Bank of Scotland (RBS) threatened to quit under Government plans to veto bonus payments.
The threat of a mass exodus comes as the bank is planning bonuses of £1.5 billion to staff in its investment arm for its performance in 2009.
In response to the threat, City Minister Lord Myners said bankers need “to come back into the real world”.
Lord Myners said it was unrealistic that bankers should expect to be paid million pound bonuses.
Today, it has emerged that 200 executives at Lloyds are set to receive one-off payments worth up to 80% of their annual salaries.