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Banks will repay taxpayer in full, says BBA

Banks will repay taxpayer in full, says BBA

Category: Economy

Updated: 18/03/2010
First Published: 18/03/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The British Banking Association (BBA) has said that its members are committed to repaying taxpayers in full for their support during the financial crisis.

Writing to Treasury Minister, Lord Myners, BBA chief executive, Angela Knight, said the financial sector should not be a burden on society, and was working on regulatory changes to ensure the burden was shifted back from the taxpayer to the banking industry.

The financial crisis saw the near collapse of a number of providers in the UK. The Government was first forced prop up Northern Rock, against a backdrop of customers queuing to withdraw funds.

The Royal Bank of Scotland and Lloyds Banking Group were also part nationalised in a bid to save Britons' money.

"No institution should be regarded as too important to fail," said Ms. Knight.

"The banking industry is engaged with Government and the regulatory authorities in a landmark reform programme, not only to avoid such problems occurring in future but also putting in place arrangements so that every bank has its own special recovery plan."

In the correspondence, it was made clear that steps were already being taken in the UK and abroad to strengthen the global banking system, including:

• Measured increases in the funds banks need to hold, which could rise if they are seen to be taking greater risks; and
• Recovery and resolution plans which would help banks respond to future financial crises, and ultimately unwind if deemed necessary.

The letter also cautioned against increasing the burden on consumers through imposing further taxes on financial transactions, explaining that the banking sector already raises a greater proportion of tax than any other business sector.

Customers already face a rise in the cost of financial services due to changes in regulation, it warned.

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