Downing Street Says » Meeting with Banking Officials

Asked for more information on the meeting taking place, the Prime Minister s Spokesman (PMS) told the assembled press that he was not in a position to say much at this point. This was the latest in a series of meetings with the banks. The PMS understood that the meeting was still taking place, so it was possible that the Treasury would be able to say more once the meeting was concluded.

Asked whether the Prime Minister thought he had much leverage over the banks to make them resume lending, the PMS replied that one of the positions that we agreed with the banks was that at the time of the re-capitalisation, they agreed that the availability of credit would be maintained at 2007 levels. Exactly how that might be implemented was something the PMS was sure would be discussed at the meeting.

Put that any action taken by the banks could take months when it was needed now, the PMS said he was sure that one of the issues they would be discussing would be how we monitored this over a period of time, but he added that it might be easier to have this conversation once the meeting had concluded. Asked if there was any suggestion that Government money would be taken away if the banks did not comply, the PMS said we had made a commitment to the re-capitalisation of the banks. This was a very firm commitment and the banks themselves voluntarily agreed to the conditions that were attached to that.

Asked whether a bank that had not been re-capitalised that took advantage of the loan guarantee had to comply with the lending requirements, the PMS replied that commitments had been entered into by specific banks and those were the rules that applied.

Asked repeatedly to explain the meaning of availability of lending, the PMS said that the Government had always made clear that this was about availability. It was for the banks to determine with their customers exactly what the actual lending might be. The PMS referred people back to the language in the agreement, which also referred to maintaining availability on competitive terms or words to that effect. Asked what the Government s objectives for the meeting were, the PMS said that this was part of a series of meetings with the banks and as people would expect the Government was in close contact with the banks at this time.

Put that the Government may have oversold its influence on the banks, the PMS said that these were commitments the banks themselves had voluntarily entered into as part of the re-capitalisation programme. The PMS added that it was not a case of anybody selling anything; it was more a case of there being a piece of paper agreed to by the banks at the time.

Put that Lord Mandelson had said that he would make banks that weren t part of the programme comply, the PMS confirmed that he had said that.

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» Thursday, October 23, 2008

Meeting with Banking Officials

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