Think tank warns of fresh bank bailout

| October 4, 2010 | 0 Comments

According to the New Economics Foundation (NEF), banks could be forced to seek more support from the taxpayer next year, due to a £25 billion funding gap.

The NEF has published a report on Britain’s banks entitled “Where Did Our Money Go?” and the 88-page document suggests an urgent reform of the sector is required, including breaking up existing banks.

A similar move was suggested by the Independent Commission on Banking (ICB) recently.

The report by the NEF comes at a time when banks are under increasing pressure to put aside more cash to boost their capital strength.

The NEF also attacked the Government for a lack of information about how previous bailout funds had been used.

Both Royal Bank of Scotland and Lloyds Banking Group required emergency funding in the autumn of 2008 to save them from collapse.

Meanwhile, the report has been dismissed by Chancellor George Osborne, who said he is not expecting any British bank to require any further support from the Government.

Furthermore, the British Bankers Association (BBA) responded to the report and said banks were well placed to cope with any future financial problems.

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