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| 'No recovery soon' in bank credit | 'No recovery soon' in bank credit |
| (2 days later) | |
| Consumers and companies will continue to find it difficult to access credit for the next one to two years, the boss of Barclays bank has said. | Consumers and companies will continue to find it difficult to access credit for the next one to two years, the boss of Barclays bank has said. |
| Credit remains available to households and businesses but the amount available is shrinking, John Varley told the BBC. | Credit remains available to households and businesses but the amount available is shrinking, John Varley told the BBC. |
| He said he did not expect banks to start to increase their lending again until 2010 at the earliest. | He said he did not expect banks to start to increase their lending again until 2010 at the earliest. |
| In an interview for BBC1's Panorama, Mr Varley also said the banking industry should say sorry for the crisis. | In an interview for BBC1's Panorama, Mr Varley also said the banking industry should say sorry for the crisis. |
| The programme, which looks at how Britain's banks went to the brink of collapse in October and what the future holds for the economy, includes interviews with the chancellor and leading City figures. | The programme, which looks at how Britain's banks went to the brink of collapse in October and what the future holds for the economy, includes interviews with the chancellor and leading City figures. |
| Talking to the BBC's Business Editor Robert Peston, Mr Varley stressed that the banks were open for business and they were still lending. | Talking to the BBC's Business Editor Robert Peston, Mr Varley stressed that the banks were open for business and they were still lending. |
| But he said that a reduction in the overall quantity of debt in the economy was necessary. | But he said that a reduction in the overall quantity of debt in the economy was necessary. |
| "I think that we will see the process of reduced borrowing play out over at least the course of the next 12 months maybe, maybe 24 months," he said in the interview. | "I think that we will see the process of reduced borrowing play out over at least the course of the next 12 months maybe, maybe 24 months," he said in the interview. |
| Asset prices | Asset prices |
| The amount of credit available was "shrinking, it absolutely is, and that is a painful process, it's a process through which the world absolutely has to go," he insisted. | The amount of credit available was "shrinking, it absolutely is, and that is a painful process, it's a process through which the world absolutely has to go," he insisted. |
| However, in the politically sensitive area of lending to small businesses Barclays actually increased its overall lending, according to Mr Varley. | |
| "As soon as asset prices stabilise, then we will see the financial economy recover. And when will that occur? That will occur some time over the course of the next 18 months," he went on. We have to have a banking industry in which consumers have trust John Varley Chief executive of Barclays | "As soon as asset prices stabilise, then we will see the financial economy recover. And when will that occur? That will occur some time over the course of the next 18 months," he went on. We have to have a banking industry in which consumers have trust John Varley Chief executive of Barclays |
| The BBC's business correspondent Joe Lynam said Mr Varley's prediction would not be welcomed by the government, which had been leaning on banks to increase lending to small businesses and individuals without delay. | The BBC's business correspondent Joe Lynam said Mr Varley's prediction would not be welcomed by the government, which had been leaning on banks to increase lending to small businesses and individuals without delay. |
| Mr Varley also told the BBC that the banking industry was going through what he called a "public relations crisis" and must apologise for what went wrong. | Mr Varley also told the BBC that the banking industry was going through what he called a "public relations crisis" and must apologise for what went wrong. |
| "We have to have a banking industry in which consumers have trust and in some cases that trust has broken down," he said. | "We have to have a banking industry in which consumers have trust and in some cases that trust has broken down," he said. |
| "If I ask myself, 'Do I feel the industry should be self-confident about recreating that trust through time?' I do feel that, but it starts by saying sorry. | "If I ask myself, 'Do I feel the industry should be self-confident about recreating that trust through time?' I do feel that, but it starts by saying sorry. |
| "It starts by admitting things went wrong." | "It starts by admitting things went wrong." |
| He said he hoped his own bank was one of those in which customers still had trust. | He said he hoped his own bank was one of those in which customers still had trust. |
| HAVE YOUR SAY This is no time to be spending money you don't have Mike, East Sussex Send us your comments | HAVE YOUR SAY This is no time to be spending money you don't have Mike, East Sussex Send us your comments |
| But he went on: "If you look at the industry as a whole, if I speak as a member of the industry rather than as chief executive of Barclays, I absolutely have to say we should share our portion of responsibility." | But he went on: "If you look at the industry as a whole, if I speak as a member of the industry rather than as chief executive of Barclays, I absolutely have to say we should share our portion of responsibility." |
| Our correspondent said Mr Varley was not the first senior banker to admit failings. | Our correspondent said Mr Varley was not the first senior banker to admit failings. |
| In November, Royal Bank of Scotland chairman Sir Tom McKillop said he was "profoundly sorry" for his company's financial difficulties. | In November, Royal Bank of Scotland chairman Sir Tom McKillop said he was "profoundly sorry" for his company's financial difficulties. |
| Last week, Mr Varley predicted in an interview with Sky News that house prices would fall by a total of 30%. | Last week, Mr Varley predicted in an interview with Sky News that house prices would fall by a total of 30%. |
| Michael Coogan, the director general of the Council of Mortgage Lenders, said the reduction of available credit was due to an "insufficient supply in the market". | Michael Coogan, the director general of the Council of Mortgage Lenders, said the reduction of available credit was due to an "insufficient supply in the market". |
| "What we're also seeing now in an environment of house price falls, is that fewer consumers are willing to commit themselves - fewer first time buyers are able to get the deposit, and that therefore affects the whole chain of transactions," he said. | "What we're also seeing now in an environment of house price falls, is that fewer consumers are willing to commit themselves - fewer first time buyers are able to get the deposit, and that therefore affects the whole chain of transactions," he said. |
| "So certainly there needs to be more done... we're working with government to try and make sure there's more money flowing". | "So certainly there needs to be more done... we're working with government to try and make sure there's more money flowing". |
| The interview with John Varley was recorded for Panorama and will be shown on Monday at 8.30pm on BBC 1. | The interview with John Varley was recorded for Panorama and will be shown on Monday at 8.30pm on BBC 1. |