This box provides an update on crisis-related interventions in the financial system, in particular:
- equity injections into Royal Bank of Scotland (RBS), Lloyds and Northern Rock plc;
- holdings in Bradford & Bingley (B&B) and Northern Rock Asset Management (NRAM), now managed by UK Asset Resolution (UKAR);
- loans through the financial services compensation scheme (FSCS) and various wholesale and depositor guarantees; and
- other support, through the asset protection scheme, special liquidity scheme, credit guarantee scheme and a contingent capital facility – all now closed.
Table A summarises the position as at the end of September 2014. In total, £134 billion has been disbursed by the Treasury. (Following the PSF review, the total sum adds to net debt, whereas previously some was netted off as liquid assets.) Principal repayments on loans, proceeds from share sales and redemptions of preference shares amounted to £35 billion. And the Treasury also received a further £17 billion, mainly fees. So the net cash position currently stands at around a £82 billion shortfall.
The Treasury is currently owed £41 billion – largely the value of loans outstanding – while it retains shares in Lloyds and RBS – currently valued at £48 billion – and holdings in B&B and NRAM. Our forecast includes projections for loan repayments from B&B and NRAM, but no other loan repayments or share sales, due to uncertainty over their scale and timing.
If the Treasury were to receive all loan payments in full, and sold the shares at their latest values, it would realise an overall cash surplus of around £8 billion. These figures exclude the costs to the Treasury of financing these interventions, and any offsetting interest and dividend receipts. If all interventions were financed through debt, the Treasury estimate that additional debt interest costs would have amounted to £20.6 billion to date.