Further Reading
- Maintaining financial stability of UK banks: update on the support schemes
- HM Treasury: The Asset Protection Scheme
Member News
The government did not do enough to reprimand part-nationalised banks when they failed to reach targets for lending to small businesses, a group of MPs has said.
The House of Commons public accounts committee said the Treasury failed to implement effective sanctions against the Royal Bank of Scotland and Lloyds when they lent £30bn less than was expected.
It looked at the Treasury's asset protection system, launched in January 2009 to protect RBS and Lloyds, which are 84 per cent and 43 per cent owned by the tax payer following the bank bail-out in the financial crisis.
In return the banks agreed lending targets.
RBS missed its target by £22bn and Lloyds missed its target by £8bn between March 1 2009 and February 28 2010.
However, the Treasury failed to take action and set a series of gross lending targets that did not take account of repayments.
The report said RBS and Lloyds had found it "difficult" to provide the Treasury with robust data on their assets.
It said the gap in information on the banks' assets also "begs questions about the role played by auditors of the banks ahead of 2008".
The committee called on the Treasury to report within a year on "specific actions to ensure that professional audit standards and practices are up to the task".
Committee chair Margaret Hodge said: "The Treasury appears to lack strong determination to use its influence to increase lending to small businesses. We expect it to find effective mechanisms to ensure the banks meet their lending commitments."
She added: "There is still no way to avoid the taxpayer having to bear the cost of any such failure.
"This committee feels that it is inappropriate for banks dependent on taxpayer support to be generating excessive incomes, unnecessary bonuses or dividends at the expense of exiting public support."
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