Emma Crosby business presenter Sky News

Banks are in the headlines again as the bosses of the UK’s biggest lenders meet with the Chancellor Alistair Darling and RBS asks shareholders for a staggering £12 billion to shore up its balance sheet.

Summoned or Invited to Number 11? A cosy fire-side chat perhaps or a telling off from the Head Master?

We’re told the Government is very keen to see banks pass on the benefits of the three recent interest rate cuts to the nation’s borrowers. Given that, as a country, we’re more than a trillion pounds in debt that pretty much means all of us.

Most people have seen their mortgage or credit card rates rising despite the Bank of England’s base rate falling. That means millions of unhappy people. And potentially millions of unhappy voters.

Since the credit crunch first bit 9 months ago lenders and the bodies that represent them have moaned the Bank of England hasn’t done enough to help them deal with life getting tougher. Yesterday their prayers were partly answered with our central bank offering a massive loan facility of £50 billion pounds to access cheaper money and get the wheels of finance rolling again.

So is this quid pro quo? You scratch my back and I’ll scratch yours? Is it time now for the Banks to repay the favour?

Don’t hold your breath. From what I’m hearing is that lenders will only start to pass on savings when the interest rate between banks, the Libor rate, comes down. It has remained stubbornly high and the jury is still out on whether yesterday’s unprecedented action from the B of E will do the trick. It may be 2 to 3 weeks before we know.

Add to the fact that RBS is tapping its shareholders for the biggest rights issue in UK corporate history suggests it may not take the full opportunity offered by this £50 billion Bank of England aid package. If other banks follow suit will any benefits from the loan facility be diluted and the Libor rate take even longer to come down?

We spoke to Stephen Sklaroff from The Finance and Leasing Association earlier. He’ll be at the meeting and has promised to fill us in later so watch this space for more.

Updated: 1755 - Apr 22 2008

Just come off the telephone with Stephen Sklaroff, Director General of Finance and Leasing Association who was at today's meeting with the Chancellor.

He says it was a positive meeting and they had a good discussion with ministers about the state of the mortgage market and what they could do to help customers having difficulty repaying their monthly rates. He also said this number is still very small.

But as predicted no agreement on banks passing cuts on to borrowers now. Mr Sklaroff said the Ministers understand how the markets work and when the Libor rate comes down then we'll more than likely see cheaper lending rates for consumers.

And when that happens is any one's guess.

Comments

[pete righton 24 Apr 2008 10:06:01]

Please sly news...do something to help, instead of continuously heaping bad news upon bad news and making a horrible situaion worse for everyone why dont you try and calm everyone down. This will stop the panic and gloom. Why dont you try and HELP people in financial difficulties. To constantly drone on and one about how bad everything is is just feeding the fire. Come up with solutions to help people, you reporters must have family and freinds who are in trouble so do it for them. Come on stop the rot sky news and be the leaders of the recovery!!

[Steve Doncaster 23 Apr 2008 12:38:05]

Hi Emma, has anybody got the strength to ask these fat cats in the city how they can award themselves millions of pounds salaries and bonuses and then within weeks we are told they have no money (ours). When the head of the bankers association was twittering on yesterday about the difficulties he dodged the question how do your members justify the telephone number salaries and bonuses by saying it was a matter for the remuneration committee's of the various institutions. What a gutless body that is as they are all have a vested interest in talking up their own paydeals. What I would like asked is what are the FSA and the government doing about all these false statistics and annual reports.

[Robert, Scotland 23 Apr 2008 05:02:36]

It would be useful if the Sky finance team were to do a consumer comparison between Britain and Germany. I pose this question because Germans have never had our "must own my own property madness". The majority prefer to rent, thus allowing them more disposeable income and the choice: spend or save/or both.
So, not owning property is not the social "stigma" that handicaps our financial affairs here. Before this Socialist Government takes this as a signal to return to the halycon days of Council houses for most, it is'nt. The Renters should be the private sector, a well and sensibly regulated private sector. The banks will cringe at the possibility of this change, but the truth is, as banks have reported soaring profits in the last decade of New Labour mis-management the people of this country have suffered declining standards in personal wealth and quality of life. The record profits have also made the banks reckless for more of the same,promoting the "casino" activities of Bank employees gambling with our monies and none of it to the benefit of the consumer.
During this comparison the Sky team should find out how "joe public's investments": pensions and stock market, have done in all the bank's high charge managed funds ( more like mis-managed or recklessly discharged funds) over the last decade. Look particularly at any meaningful correlation which can link record bank profits to investor benefit, my thoughts are it won't exist. The banks record profits are derived from the people of this Nation sinking further and further into debt and the banks punitive "bank charges" punishing any level of pay- back default.

[Dennis, Cramlington Northumberland 22 Apr 2008 21:53:36]

Brian in Lux

Because (out of luck?) people take out a 100% mortgage does not necessarily mean that they have no 'maoney' left at end of the month.

They may of course be trying to make their way in the world without the advantages you obviously must have, and able to pay nevertheless.

The Government is sending out the fire engines now instead of taking fire prevention measures months ago.

All to protect it's miserable and continued existence in power.

N Rock again?

Let's have some more scapegoats and sacrificial lambs then, and afterwards try to rob the shareholders; watch out! you RBS 'investors', and you lot, at Alliance & Leicester...

Politics is more important than fairness, it seems.

[brian ham - luxembourg 22 Apr 2008 19:36:51]

People who take out a 100% mortgage obviously have no maoney left at the end of the month, which means that any interst rate rise is going to be a catastrophe.
Why should the taxpayer bail them out

[Bob Hallam Keighley 22 Apr 2008 19:01:23]

The Bank of England is only doing what the European Central Bank has been doing for months. The Spanish banking system has had massive help but have NOT had a northern Rock or RBS. The question needs to be asked why is the government trying to keep a housing bubble going. Banks and Buy-to-Let INVESTORS have had a on-going birthday which has kept the UK economy going. But building on this foundation does not equal economic stability. We have growing inflation and price pressures which require a touch of realism from bankers and politicians. Neither will control this situation - one for easy profits the other to win elections. Instead of Brown and Darling playing the bankers silly game in my opinion they need to be thinking about the future and where the UK economy will be in 3 or 4 years which is firmly in Europe despite what Rupert Murdoch thinks-Lets join the Euro and the ECB and think united states of EUROPE not USA as World power and economics are shifting at a pace and not states side.