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| Clarke attacks 'failed' bank plan | Clarke attacks 'failed' bank plan |
| (about 6 hours later) | |
| Government initiatives to get banks lending have failed, shadow business secretary Kenneth Clarke has said. | Government initiatives to get banks lending have failed, shadow business secretary Kenneth Clarke has said. |
| Measures including credit guarantees were launched by Chancellor Alistair Darling in January to boost lending. | Measures including credit guarantees were launched by Chancellor Alistair Darling in January to boost lending. |
| But Mr Clarke said a Federation of Small Businesses survey suggested only 8% of small firms found banks had made credit available under the guarantees. | But Mr Clarke said a Federation of Small Businesses survey suggested only 8% of small firms found banks had made credit available under the guarantees. |
| He also said the HBOS and Lloyds TSB merger had been a "disaster", more so for the latter institution. | He also said the HBOS and Lloyds TSB merger had been a "disaster", more so for the latter institution. |
| "They should never have been allowed to merge," he added. "Lloyds TSB was a boring bank, it was a steady bank, it hadn't done silly things." | "They should never have been allowed to merge," he added. "Lloyds TSB was a boring bank, it was a steady bank, it hadn't done silly things." |
| Mr Darling, meanwhile, has sought to quell speculation that the Lloyds Banking Group could be nationalised. | |
| Speaking at the G7 summit in Rome, he said: "I've made it very, very clear on a number of occasions that we believe that banks are best run in the commercial sector and privately owned, properly regulated and supervised. | |
| "That's the best place for them to be and our policy hasn't changed one bit." | |
| But he has said the government had to intervene quickly at the time of the merger to stop the banking system's collapse | |
| 'Dithering' | 'Dithering' |
| The FSB survey that more than half (53%) of small businesses said they did not believe the government's policies would get banks lending again. | The FSB survey that more than half (53%) of small businesses said they did not believe the government's policies would get banks lending again. |
| Mr Clarke said it was "frightening" that ministers were "dithering" over implementation, he told the BBC's Today programme. | Mr Clarke said it was "frightening" that ministers were "dithering" over implementation, he told the BBC's Today programme. |
| He said there was a "huge gap" between Treasury rhetoric and reality. It looks increasingly as if Lloyds HBOS will now go into majority public ownership - followed inevitably by nationalisation Vince CableLiberal Democrat treasury spokesman class="" href="/1/hi/business/7888699.stm">Lloyds shares tumble after update class="" href="/1/hi/uk_politics/7889798.stm">Darling defends bailout of HBOS | |
| "I am just astonished that no-one appears to have had the discussions with the banks about the operation of the scheme from the day it was proposed," Mr Clarke added. | |
| He said he hoped that ministers would "get the banks in, give them the way in which these applications should be handled and get this scheme into practice". | He said he hoped that ministers would "get the banks in, give them the way in which these applications should be handled and get this scheme into practice". |
| Mr Clarke also accused ministers of "dithering" over taxpayer-backed protection for banks from so-called "toxic assets". | Mr Clarke also accused ministers of "dithering" over taxpayer-backed protection for banks from so-called "toxic assets". |
| 'No alternative' | 'No alternative' |
| Lloyds Banking Group - which completed its takeover of HBOS last month - has said that it expects its subsidiary to make record losses of nearly £11bn. | Lloyds Banking Group - which completed its takeover of HBOS last month - has said that it expects its subsidiary to make record losses of nearly £11bn. |
| Shares in the group, which is 43% owned by the taxpayer, closed down 32.5% after the surprise announcement. | Shares in the group, which is 43% owned by the taxpayer, closed down 32.5% after the surprise announcement. |
| Mr Clarke said that if the government hadn't forced through what he called a "shotgun marriage", the company might be in a more comfortable position now. | Mr Clarke said that if the government hadn't forced through what he called a "shotgun marriage", the company might be in a more comfortable position now. |
| Alistair Darling comments on the HBOS losses | Alistair Darling comments on the HBOS losses |
| When asked whether the losses represented a disaster for the taxpayer that he had caused, Mr Darling said the government had "no alternative" but to act. | When asked whether the losses represented a disaster for the taxpayer that he had caused, Mr Darling said the government had "no alternative" but to act. |
| "We didn't have months or weeks to look at it, we had to intervene quickly and that is what we did," he told the BBC's Newsnight. | |
| "Now what we've asked the new management to do is to go through the books so we can deal with the assets that have gone bad and the other problems that have emerged." | "Now what we've asked the new management to do is to go through the books so we can deal with the assets that have gone bad and the other problems that have emerged." |
| Mr Darling said allowing HBOS to collapse would have had knock-on effects for all of Britain's banks. | Mr Darling said allowing HBOS to collapse would have had knock-on effects for all of Britain's banks. |
| "If we had not intervened... the banking system would have gone down, taking millions of families, millions of businesses with it. No responsible government could have done that," he said. | "If we had not intervened... the banking system would have gone down, taking millions of families, millions of businesses with it. No responsible government could have done that," he said. |
| The extent of HBOS' problems were revealed in a week when the City watchdog, the Financial Services Authority, said it had raised concerns about the way the bank was being run as far back as 2002. | The extent of HBOS' problems were revealed in a week when the City watchdog, the Financial Services Authority, said it had raised concerns about the way the bank was being run as far back as 2002. |
| Liberal Democrat treasury spokesman, Vince Cable said: "Obviously we need to digest the detail, but it looks increasingly as if Lloyds HBOS will now go into majority public ownership, followed inevitably by nationalisation." | Liberal Democrat treasury spokesman, Vince Cable said: "Obviously we need to digest the detail, but it looks increasingly as if Lloyds HBOS will now go into majority public ownership, followed inevitably by nationalisation." |
| 'Long-term potential' | 'Long-term potential' |
| The expected losses at HBOS were £1.6bn more than it predicted in November. | The expected losses at HBOS were £1.6bn more than it predicted in November. |
| Much of the blame has been laid at a £7bn write-down at its corporate division, which is heavily exposed to the hard-hit housing and commercial property sectors. | Much of the blame has been laid at a £7bn write-down at its corporate division, which is heavily exposed to the hard-hit housing and commercial property sectors. |
| Lloyds chief executive Eric Daniels insisted the company's longer term prospects were brighter. | Lloyds chief executive Eric Daniels insisted the company's longer term prospects were brighter. |
| "Lloyds Banking Group has the largest UK financial services franchise, with excellent long-term earnings potential," he said. | "Lloyds Banking Group has the largest UK financial services franchise, with excellent long-term earnings potential," he said. |