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Tuesday 7 October 2008
Barclays, RBS Said to Be in Talks on U.K. Government Funding
The U.K. government may invest at least 45 billion pounds ($79 billion) in banks including Royal Bank of Scotland Group Plc and Barclays Plc to bolster capital depleted by mortgage-related losses, two people with knowledge of the situation said. PDF
Barclays, RBS Said to Be in Talks on U.K. Government Funding
By Ben Livesey and Poppy Trowbridge 7 October 2008
(Bloomberg) -- The U.K. government may invest at least 45 billion pounds ($79 billion) in banks including Royal Bank of Scotland Group Plc and Barclays Plc to bolster capital depleted by mortgage-related losses, two people with knowledge of the situation said.
Chancellor of the Exchequer Alistair Darling and Bank of England Governor Mervyn King met with banking chief executive officers from RBS’s Fred Goodwin to Barclays’s John Varley late yesterday to discuss the investment, said the people, who declined to be identified because the meeting was confidential.
U.K. banks are selling assets and cutting lending to each other to help preserve cash amid the credit crisis. The government has bailed out Bradford & Bingley Plc and brokered the takeover of HBOS Plc in the past month on concern about the banks’ ability to fund themselves. Darling said yesterday he will do “whatever it takes” to keep the financial system stable as capital markets remain frozen.
“Some sort of government guarantee is a sensible measure, which could give a sense of security for banks to start lending to each other again,” said Simon Willis, a London-based analyst at NCB Stockbrokers Ltd. “We can’t tell if this will be enough until we get there, but it’s a good first step.”
RBS, HSBC Holdings Plc and the U.K.’s four other biggest banks need to repay as much as 54 billion pounds of debt by the end of March, just as borrowing costs reach record highs. The total, which includes bonds, loans and commercial paper, is triple the $29 billion of debt repaid in the same period a year earlier. RBS and HSBC have about 11.5 billion pounds each of obligations coming due in the next six months, while Barclays has 15.9 billion pounds maturing, according to data compiled by Bloomberg.
‘All Practical Options’
RBS spokeswoman Carolyn McAdam declined to comment, as did Barclays spokesman Alistair Smith. Treasury officials couldn’t immediately be reached for comment. An official in Prime Minister Gordon Brown’s office had no immediate comment. Last night his official spokesman Michael Ellam echoed Darling in saying the government would not be giving details of what it is considering.
“It would be irresponsible to speculate on the specifics of future responses,” Darling told Parliament last night. “Providing a running commentary could add to uncertainty. All practical options must remain open to us.”
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Barclays, RBS Said to Be in Talks on U.K. Government Funding
By Ben Livesey and Poppy Trowbridge
7 October 2008
(Bloomberg) -- The U.K. government may invest at least 45 billion pounds ($79 billion) in banks including Royal Bank of Scotland Group Plc and Barclays Plc to bolster capital depleted by mortgage-related losses, two people with knowledge of the situation said.
Chancellor of the Exchequer Alistair Darling and Bank of England Governor Mervyn King met with banking chief executive officers from RBS’s Fred Goodwin to Barclays’s John Varley late yesterday to discuss the investment, said the people, who declined to be identified because the meeting was confidential.
U.K. banks are selling assets and cutting lending to each other to help preserve cash amid the credit crisis. The government has bailed out Bradford & Bingley Plc and brokered the takeover of HBOS Plc in the past month on concern about the banks’ ability to fund themselves. Darling said yesterday he will do “whatever it takes” to keep the financial system stable as capital markets remain frozen.
“Some sort of government guarantee is a sensible measure, which could give a sense of security for banks to start lending to each other again,” said Simon Willis, a London-based analyst at NCB Stockbrokers Ltd. “We can’t tell if this will be enough until we get there, but it’s a good first step.”
RBS, HSBC Holdings Plc and the U.K.’s four other biggest banks need to repay as much as 54 billion pounds of debt by the end of March, just as borrowing costs reach record highs. The total, which includes bonds, loans and commercial paper, is triple the $29 billion of debt repaid in the same period a year earlier. RBS and HSBC have about 11.5 billion pounds each of obligations coming due in the next six months, while Barclays has 15.9 billion pounds maturing, according to data compiled by Bloomberg.
‘All Practical Options’
RBS spokeswoman Carolyn McAdam declined to comment, as did Barclays spokesman Alistair Smith. Treasury officials couldn’t immediately be reached for comment. An official in Prime Minister Gordon Brown’s office had no immediate comment. Last night his official spokesman Michael Ellam echoed Darling in saying the government would not be giving details of what it is considering.
“It would be irresponsible to speculate on the specifics of future responses,” Darling told Parliament last night. “Providing a running commentary could add to uncertainty. All practical options must remain open to us.”
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