Another rescue package for banks – MoneyWeek

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LastOctobersbankingrescuepackage,aswenowknow,wasonlyastickingplasterremedy,asJeremyWarnerputitinTheIndependent。

Sothisweek,asRBS(LON:RBS)announcedithadlostupto£28bnlastyear,sawthelaunchofasecondpackagetobolsterthebanksandstimulatelending。

Thegovernmentwillguaranteeasset-backedsecuritiesissuedbybanksinanattempttore-openthewholesalefundingmarketandwillalsoinsureriskydebt。

Thebankswillbeliableforjustthefirst10%oflosses。

Inreturn,theywillpayafeeandcommittokeeplending。

Thehopeisthatthiswillputafloorunderthevalueoftoxicassetsonbankbalancesheets,reducinguncertaintyandencouragingfurtherlending。

Willthebankrescuework?

Akeyproblemisthatwedontknowhowmuchthebankswillpayforthisprotection,orhowmanybillionsthestatewillinsure。

Thisuncertainty,alongwithfearsoffurtherlossesandnationalisation,sentbanksharesintofreefallthisweek。

Meanwhile,boostinglendingsignificantlyisatallorder,giventhatforeignlendersarealsoretrenching。

Alongwithnon-bankfirmstheyaccountedfor50%ofthecorporatelendingmarketoverthepastdecade,saidtheWallStreetJournal。