King Claims Royal Bank of Scotland and Lloyds Effectively Nationalised

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King Claims Royal Bank of Scotland and Lloyds Effectively Nationalised

Fri, 27 Feb 2009

Governor of the Bank of England, Mervyn King, has suggested that the Royal Bank of Scotland and Lloyds TSB are now nationalised in all but name. Following assertions from the Treasury that the banks, which are majority owned by the Government, should still be classified as private sector companies, Mr King suggested to the Treasury Select Committee that the banks are now overwhelmingly under public control.

Mr King said, ‘The economic substance is clear. The taxpayer has had to put in so much money to ensure the viability of these banks and is now contributing the majority of the equity capital, as well as a vast amount of public support in terms of lending to these banks. The Government owns more than 50pc of the equity in RBS and Lloyds and can take its decisions accordingly. I don't see a significant difference between that and outright nationalisation, except in the sense that this system we have now has the merit of trying to make it clear to everybody that nobody thinks the Government should be running these banks indefinitely.’

In light of the extravagant pension set to be received by Sir Fred Goodwin, Mr King went on to criticise the bonus culture of the City.

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