Government Plans to Boost Lending

Government Plans to Boost Lending

The Government has announced plans to encourage banks back into the lending habit with wide ranging measures the Government being able to take further shares i.e.  greater ownership in Banking Groups.

The new plans are designed to encourage banks to lend to individuals and businesses.  

The basic plans are as follows:

• An Insurance Scheme allowing Banks to reinsure all those mortgages debts that they believe are high risk i.e.  protection from bad debts with the Treasury.  Banks will agree any bad debt losses from a particular debt and then be able to insure up to 90% of the potential debt with the Treasury.   Banks will have to pay insurance premiums for the facility.
• The Bank of England will be able to buy up to £50bn worth of assets in companies in all sectors of the economy
  
• Northern Rock has extra time to repay its debt to the Government
• The Government has increased its stake in Royal Bank of Scotland (RBS) from 58%  to 70% costing another £40bn.
  

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