Abacus Daily Debt News

RBS and Lloyds ‘effectively nationalised’

The Royal Bank of Scotland and Lloyds Banking Group have been declared as public sector bodies by the Office for National Statistics (ONS), following their government bailouts.

Although Lloyds was not in fact directly aided by taxpayers’ money, it has acquired bailed-out organisation HBOS and, therefore, its debts.

The move was decided upon by the ONS as it felt the government should have control over the lenders’ corporate policies.

It could have implications for borrowers of products from the banks, as well as the UK’s economic situation.

Liberal Democrat shadow chancellor Vince Cable commented that the government "has in effect nationalised RBS and has a substantial stake in Lloyds".

He argued that the measure could now provide an opportunity for lending conditions in Britian to be improved.

Mr Cable remarked that ministers must "accept the reality" that they own two large banks and "use them to ensure the flow of much-needed credit into the economy".

By Jamie Price