Banking: Quantitative Easing

Lord Peston Excerpts

Monday 10th October 2011 Lords Chamber

[Lord Sassoon]

My Lords, the downgrading by Moody's last week was long expected by the markets. It is largely a reflection of the fact that under the Vickers proposals—the independent commission's proposals—there will be a different relationship between the banks and the taxpayer: the taxpayer will not be on the hook for the banking system in the way that it was. As a result, as expected, Moody's changed the ratings on a number of banks. Equally, it made it clear that that was not a reflection on the well capitalised state of the UK banking system. The UK banks continue, as Moody's and others have said, to be in a more robust state to withstand shocks from the eurozone than banks on the continent of Europe.

[Lord Peston]

My Lords, I am not sure that I understood one of the noble Lord’s earlier answers. Does the Treasury expect to get back all the money it has put into the two banks mentioned in the Question? If so, when can we expect to see that money?

[Lord Sassoon]

My Lords, I do not think that I touched on that point in a previous answer at all. UKFI has a responsibility, on behalf of the Government, to look, over time, at ways to create value out of the shareholdings, and that is what it will do. There is no question of any particular benchmark; we need to ensure that the taxpayer gets maximum value, subject to questions of competition and financial stability, over time, from the holdings in the banks. That is the mandate that UKFI has.