LONDON, January 19 – Britain on Monday unveiled an insurance scheme to protect banks from so-called toxic assets as it seeks to boost lending by British banks crippled by the credit crisis.
"The government is clear that meeting lending demand to otherwise creditworthy businesses, homeowners and consumers is essential for supporting economic recovery," the government said in a statement.
The announcement came as Royal Bank of Scotland, majority-owned by the taxpayer since the credit crisis, said it estimated an underlying annual loss of up to 8.0 billion pounds (11.9 billion dollars).
"Credit and market conditions in the fourth quarter of 2008 were particularly challenging and RBS estimates the group will report for full year 2008 an attributable loss, before exceptional goodwill impairments, of between 7.0 and 8.0 billion pounds," RBS said in a trading update.
The Treasury said it would further boost help to RBS.
"With continuing instability in the global financial markets, expected to be demonstrated by a run of poor financial results from the industry, the government is today taking action… to adjust its commercial investments in the Royal Bank of Scotland Group to stabilise further its position and ensure it has the tools to enhance its contribution to the long term strength of the economy," the Labour government said in a separate statement.