Saturday, March 07, 2009

UK banks and the government

The government has managed to get Lloyds to increase its lending as part of the scheme to insure bad assets.

Mr Darling said the deal was a vital step in giving banks the confidence to increase their lending.

"Lloyds' commitment to lend an additional £14bn this year, on top of the £25bn committed by RBS, gets to the heart of the problems we face... by easing the flow of credit," he said.

"Restoring our banks to full health and ensuring they are able to support creditworthy families and businesses is an essential part of any plan for recovery."

Of the £14bn in lending this year, £11bn will go to companies and £3bn on mortgages.

No way out

Mr Osborne said the bank must now help revive the economy.

He told the BBC: "The real question is, are we going to get value for money?

This it not about 'value for money' it is about making sure that banks don't act in their own interest by cutting new lending (much of which looks likely to be problematic) but provide some support to firms.

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