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| Darling inches closer to nationalisation |
| Bloomberg / Mumbai Feb 27, 2009, 00:09 IST |
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Chancellor of the Exchequer Alistair Darling took a step closer to nationalising UK banks, boosting his control of Royal Bank of Scotland Group and pressing former Chief Executive Fred Goodwin to give up his pension.
The Treasury will allow its stake in RBS to climb above 80 per cent after guaranteeing £325 billion ($462 billion) in toxic assets. Darling wants to claw back £650,000 a year in payouts to Goodwin, who resigned after asking the government for bailout funds.
Prime Minister Gordon Brown’s government is upset banks are rationing loans as the economy suffers its worst recession since the 1980s. While Darling wants to keep some private ownership of RBS and other banks, he wants the industry to use taxpayer funds to underwrite new lending to businesses and consumers.
“We want to ensure that by cleaning up balance sheet, by making sure RBS will have enough capital, that we can get through this period,” Darling said in an interview on BBC Radio 4 in London on Thursday. When asked about Goodwin’s pension, he said, “You cannot justify these excesses.”
Thursday’s moves build on the January 19 bank rescue program, when Darling promised government backing for assets that fund loans to homeowners, businesses and commercial property. Lloyds Banking Group also is negotiating to join that program and may announce the extent of its participation tomorrow. It hasn’t yet agreed the terms with Treasury officials.
For Brown, state encroachment into banking is a political headache as voters grow more concerned about the cost of the bailout and the outsized pay packages for executives. Support for the Labour government, which enjoyed a bounce after the first bank rescue in October, fell further behind the Conservatives in recent weeks.
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