Further bank bailout measures announced

Dated:   

The Government have unveiled a new series of bank bailout measures in a bid to support the banking industry and spark new lending.

The Bank of England is to create a new fund worth up to £50bn with a view to assisting the corporate sector by taking securities and assets in return for that money going into the economy.

The credit guarantee scheme is to be extended until December 09. The scheme hopes to reduce the risk of lending between banks. This scheme gives banks the reassurance that even if they have leant money to banks who announce very bad losses, those losses will be guaranteed by the Government, safeguarding against a collapse.

A new guarantee scheme for asset-backed securities will be launched to help support lending. From April the government will offer full or partial guarantees attached to triple A rated securities.

The Treasury have also pledged to get wholesale markets moving again stating: "Mortgage-based securities supported a third of mortgage lending and the revival of this market is an important element of increasing the capacity of lenders to provide mortgages as demand increases in future."


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