Downing Street Says » Financial Markets

Asked whether the Government had suggested that the European Commission should look closely at the guarantee on savings made by Irish banks, the Prime Minister s Spokesman (PMS) told the assembled press that what the Government was saying was that any policy announcement by a member state that impacts on the single market needed to be looked at and approved by the European Commission. That was no more than a statement of the obvious. This was what happened to us in relation to Northern Rock and also in relation to our intervention on Bradford and Bingley.

Asked whether the Government would follow suit if the measure was approved, the PMS replied that he had nothing to add to what the Prime Minister had said yesterday. We had intervened to guarantee savers deposits for those financial institutions that had got into difficulty, such as Northern Rock. We ensured the transfer of savers deposits in Bradford and Bingley to Santander and as the Prime Minister had said yesterday, we stood ready to do whatever was necessary.

Put that there seemed to be a groundswell of opinion that bankers should in some way be punished, the PMS said that the best way to answer that question was to refer to what the Prime Minister said yesterday, which was that there would be a time for looking at who was responsible, but the priority for now was to get on with dealing with the current difficulties and issues that were facing us in relation to what was happening in the financial markets.

Asked if the Prime Minister had any comment on the fact that all MP s invested in hedge funds via the Financial Pension Fund, the PMS said that the Prime Minister s view was that it was a matter for the parliamentary authorities.

Asked where we were on guaranteeing peoples deposits, the PMS replied that what the Prime Minister had said yesterday was that we were looking at increasing the compensation limit for depositors to 50,000 and this was a matter for the Financial Services Authority (FSA) to consult on the detailed implementation of that. People could expect the Chancellor to give further details and update the House on where we were when the House returned early next week.

Put that the Prime Minister had said it was going to be in the Banking Bill when it didn t necessarily have to be in it, the PMS said that it was part of a package of reforms that included the Banking Bill. Put that if the Prime Minister had said it, it was likely that it was going to happen, the PMS said that the Government was committed to raising the limit and the FSA was consulting on the implementation of that.

Asked when it was going to be announced, the PMS replied that the Chancellor would give more details when parliament returned next week. Put that the consultation was complete, the PMS said that process questions about consultation should be checked with the FSA.

Asked if there was any reason to believe that what Ireland had done had broken European law, the PMS replied that this was a matter that the Irish authorities had said that they were discussing with the European Commission and other European partners, so it was really a matter for the European Commission.

Asked if the Prime Minister thought it was unacceptable if LloydsTSB revised the terms of the HBOS deal, the PMS said that he did not have anything to add to what the Prime Minister had said about the matter yesterday. LloydsTSB themselves had said that they were pressing ahead with the takeover and the Prime Minister was confident that the takeover would go ahead. Put that the issue now seemed to be on what terms the deal would go ahead, the PMS said that these details were matters for the boards and shareholders of individual institutions. Asked if the Prime Minister was staying in touch with developments, the PMS confirmed that the Government was of course staying in touch with all parties.

Asked if someone with more than 50,000 worth of savings should be worried or reassured, the PMS replied that the Prime Minister and the Chancellor had made clear that we would do whatever was necessary to maintain the stability of the financial system. Of course, they had to be mindful of the interests of taxpayers as well.

Asked if it would be shrewd advice to tell members of the public to shift their savings if they had more than 50,000 worth in one account, the PMS replied that the Government did not give financial advice.

Asked if it was a balancing act between raising the limit and worrying taxpayers to the point where they would start moving money around, the PMS said the Government had said previously that it would raise the limit, it was not a new announcement. This was a question put to the Prime Minister and not an announcement by the Prime Minister in interviews yesterday. The PMS added that he would not characterise the situation in the way it was characterised in the question. The Prime Minister and the Chancellor had been making clear that we would do everything that was necessary in order to maintain the stability of the financial system.

Put that there had been some suggestion across some EU states that competition rules should be suspended while cross-border implications were sorted out, the PMS said that in relation to the issues that we had had with Northern Rock and Bradford and Bingley, we were grateful for the constructive approach that the European Commission had taken.

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» Wednesday, October 1, 2008

Financial Markets

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