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Gov't 'lacks skills and resources' to secure RBS and Lloyds sales
by Sarah Miloudi on Nov 16, 2012 at 08:59
MPs have warned the bailout of some high street lenders during the financial crisis was unlikely to translate into a quick return of the funds, pointing to the botched handling of Northern Rock's rescue and sale.
During he crisis the government helped support the likes of Lloyds by buying its shares and eventually amassing sizable stakes in lenders. But the Commons Committee of Public Accounts said the £66 billion spent 'may never be recovered' and added the sale of Northern Rock showed UK leaders lacked the skills and resources to secure a sale.
The MPs comments were made int he committee's report into the creation and sale of Northern Rock Plc, in which it was reminded the rescue of this bank alone was likely to cost the taxpayer £2 billion.
MP Margaret Hodge, who chairs the Committee of Public Accounts, also pointed to the lack of competition within the banking sector and identified this as a crucial hurdle the government had to overcome.
She said: 'The lack of competition does not fill us with confidence the taxpayer will make a profit on the sale of the two banks which remain in public ownership, RBS and Lloyds. There is a risk that the £66 billion invested in RBS and Lloyds may never be recovered.'
In the case of Northern Rock Hodge pointed out the Treasury was slow to nationalise the bank and as a result making a loss on its sale to Virgin Money was 'difficult' to avoid.
The MPs' bleak analysis comes just weeks after RBS told the market it was ready to leave a government asset protection scheme, with its boss Stephen Hester lauding the move as a significant step forward in the bank's recovery from the crisis.
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