Government financial support for corporate banking falls

Treasury financial support for corporate banks has fallen to £512 billion as of December 1st, new figures from the National Audit Office have revealed.

However, the statistics also showed the government is paying back £5 billion a year in interest on the loans it took out to purchase shares in Royal Bank of Scotland (RBS) and Lloyds at the height of the banking crisis.

The study added UK banks have weathered the financial storm in 2010 but "further shocks to the banking system (such as the collapse of a UK bank) could still lead to significant losses for the taxpayer".

Meanwhile, total government borrowing used to finance the banks has risen to £124 billion and the report warned the repayments are set to continue for several years.

National Audit Office head Amyas Morse said uncertainty in the financial markets means the government is unlikely to sell off its assets in Lloyds and RBS soon, which means more interest payments for the taxpayer in the immediate future.

The Treasury owns 83 per cent of RBS and 41 per cent of Lloyds after it saved the two banks from collapse in 2008.ADNFCR-2318-ID-800292778-ADNFCR