Banking Bosses Questioned By Treasury Committee
The recent banking crisis has caused great concern for the Government over the course of the past twelve months or so and therefore has set up a Treasury Committee to investigate the banking sector and in particular those banks which have received large loans from the Government in order to bail them out and rescue them from going under completely.
As part of this investigation, the heads of Northern Rock, Royal Bank of Scotland and the Lloyds Banking Group were called before the committee yesterday (Tuesday 12th January) to answer questions regarding their policies, how they intend to repay their government loans and what they are doing to support the economy with regard to offering loans to individuals as well as small business loans.
Gary Hoffman of Northern Rock said that the main problem for the lender related to loans offered under the Together mortgage product range, which offered loans of up to 125 per cent loan to value. He admitted that around two thirds of all Northern Rock’s repossession cases and half of all its arrears cases related to loans offered under the Together products. Arrears of three months or more on Northern Rock’s mortgage loan book stood at 4.11 per cent at the end of September last year, but for together loans, this figure was increased to 6.89 per cent.
Stephen Hester of the Royal Bank of Scotland said that RBS was on track for repaying its government loan and intended to return to private ownership within the next three to five years and was unlikely to need to call on the Government’s asset protection scheme. Eric Daniels of the Lloyds Banking Group said that most of his bank’s problems related to loans previously offered by the HBoS Group, but that he had not been hoodwinked into buying the banking group which have caused Lloyds the majority of its problems.
