The Bank of England has today revealed that it lent £62 billion in emergency loans to Royal Bank of Scotland (RBS) and HBOS in autumn 2008 - at the height of the financial crisis.
At a parliamentary hearing, the Bank’s Governor, Mervyn King, said it “was to prevent a loss of confidence spreading through the financial system as whole” and was quick to add that the loans were fully repaid in January 2009.
It was disclosed that between October and November 2008, HBOS received £25.4 billion with the money eventually repaid on January 16.
HBOS is now part of Lloyds Banking Group after a hasty takeover, arranged by the Government.
Meanwhile, RBS borrowed £36.6 billion and paid back the loan by December 16.
Defending the emergency loans, Mr King said the central bank was acting in its capacity as the lender of last resort and was described by Bank of England deputy governor, Paul Tucker, as a “dire emergency”.
The Bank of England said it had carefully considered the public interest case for disclosure but decided that the massive liquidity injections should only be revealed “once the Bank considers that the need for secrecy has ceased”.
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