Posts Tagged ‘guarantee’
BoE Governor: QE may not boost lending
Mervyn King, the Bank of England’s Governor, has confessed that the latest round of stimulus is not guaranteed to boost lending to SMEs.
The ongoing lack of credit to SMEs has been a major concern for the Government as these companies are the key to job creation in the UK and are expected to be one of the main drivers of the economic recovery.
Earlier this month, the Bank of England announced it would restart its quantitative easing (QE) programme – a scheme designed to stimulate the economy.
A recent slew of weak economic data had led to speculation that the central bank would embark on its “QE2” programme to boost the economy.
The Bank recently pumped a further £75 billion via its QE scheme after injecting £200 billion into the economy in November 2009 in an attempt to boost lending by banks.
QE, also known as printing money, is a process used for buying Government bonds or other financial assets.
However, Mr King has today told the Treasury Select Committee that banks are under pressure from investors to reduce their loan books and that the extra £75 billion may only prevent banks from reducing lending even further.
He said: “I can’t guarantee that it means that bank lending will rise. But I do believe that it won’t fall as far as it might otherwise have done.”
He added: “I think the action will make a difference to the amount of lending, but it certainly doesn’t guarantee that lending to the real economy is positive.”
Meanwhile, many have suggested the latest QE boost could drive inflation up further – which is already running at 5.2% – a 3-year high.
However, Mr King denied this but acknowledged that families are facing a “real squeeze” on their income.
Finally, Mr King was subject to some criticism for not re-introducing QE months ago but he said the Committee believed developments in the euro zone and the global economy meant “we do what we feel is appropriate at the time.”
Northern Rock’s Guernsey operation to close in September
Nationalised Northern Rock has today announced it is to close its banking operation in Guernsey on 2 September.
The closure of Guernsey‘s activities, which come after a review of offshore operations, is the latest step in the bank’s turnaround plan.
Its Guernsey operation was launched in February 1996 and it currently has some 6,000 customers, of [...]
Northern Rock savers lose 100% guarantee
Savers with Northern Rock have today lost the 100% guarantee on their cash.
The move, which was announced back in February, means the crisis-torn bank is back in line with its rivals but savers will still benefit from the £50,000 guarantee to all savers under the Financial Services Compensation Scheme (FSCS).
The 100% guarantee was put [...]
Cheque guarantee cards to be phased out
Spanish banking giant, Santander, has announced it will begin to withdraw cheque guarantee cards for its customers.
The move comes after the UK Payments Council announced months ago that it would axe the cheque guarantee service, which has been established for forty years, from June 2011.
Santander, which owns Abbey and Alliance & Leicester, said its [...]
Northern Rock sees losses narrow
State-owned bank Northern Rock has today announced losses for the 2009 year fell to £258 million, compared with £1.36 billion in the previous year.
Despite the loss, the Newcastle-based bank said it is awarding staff £14.9m in bonuses but Gary Hoffman, the chief executive of Northern Rock, is waiving his payout.
Northern Rock said Mr Hoffman’s long-term [...]