After owning almost 58% of Royal Bank of Scotland (RBS), government has started to call shots on its lending and other policies. It is also reviewing its business strategy closely.
At the time of rescuing the bank, govt has demanded bank to make commitment to lend to homeowners and small businesses at 2007 levels. And now it has started to make sure that bank fulfils its commitment.
As the first step, bank yesterday announced that it will grant a six-month moratorium to home owners fearing, or struggling to stop repossession. In other words it will not take repossession action for 6 months. It is notable that many banks are too impatient and hardly wait a month. Govt want all banks to wait at least 3 months before starting the repo proceedings. Many people can sort things out after a temporary blip. But the impatient action of many banks forces people to sell their properties in a hurry, by getting in touch with sell and rent back or other sell your house fast type companies.
Government is taking keen interest in the lending market is a good sign. This is because HBOS, which owns the country’s largest mortgage lender Halifax, is also accepting a £12bn government rescue package soon. In another twist, Lloyds TSB will be taking over HBOS next year.
In other words, Lloyds TSB will become one of the largest lender in UK. And it will end up being 40% owned by the taxpayer. So if govt’s action with RBS is any indication for the future then HBOS, and ultimately Lloyds TSB can expect the same.
Government, it seems, is anxious and serious to get the economy back on track after the fall out fro credit crunch. Who can blame them – general election is only over a year away.
Filed under: General
