Mervyn King reveals secret loans
Updated on 24 November 2009
Bank of England governor Mervyn King has revealed that secret loans of £60bn were made to the Royal Bank of Scotland and HBOS last year.
RBS and HBOS received the emergency funding from the taxpayer, but it has remained a secret until today.
The governor of the Bank of England, Mervyn King, revealed that Royal Bank of Scotland and HBOS had been lent the money late last year to prevent a loss of confidence in the financial system and the cash was repaid in full by January.
The Bank of England said it had considered at the time whether to disclose the loan but had decided not to.
In an interview with Channel 4 News, the City minister Lord Myners said: "I think this is an issue where the banks themselves recognise that if there had been excessive publicity about this it would possibly have exacerbated the problem. The real test is we came through this with the banks continuing to function and the banking system operating.
"We're talking about two of our biggest banks coming close to collapse. Parliamentary accountability has been fulfilled, both through the Bank of England's statutory accounts and in the governor's disclosure today to the Treasury select committee, which was agreed with the chancellor.
"The future of the banks matters to parliament and parliament recognises that the Bank of England occasionally needs to act covertly and it has given the Bank of England the legal power to do that.
"Parliament has precisely expected a lender of last resort to work in this way to support the banking system.
"We were in a crisis in October 2008. This was critical, together with other actions taken with the chancellor, to support the banking system."
