Belfast Telegraph

Treasury in £30bn 'bailout windfall'

By Andrew Woodcock

The Government is set to reap almost £30bn from its holdings in British banks which it bailed out at the time of the financial crisis, according to an analysis published today.

The sum - enough to fund the UK's primary schools for a year - represents a dramatic turnaround from predictions at the height of the crisis that propping up the banks could cost taxpayers as much as £850bn.

It will be achieved if equity prices rise in line with predicted economic growth over the next five years, delivering a profit of around £19bn to the taxpayer by 2015, said The Banker magazine.

At least a further £8bn will be due from fees for loans, bond guarantees and the asset protection scheme (APS) set up by the Treasury in 2009 to restore confidence in banks which had seemed in danger of failing.

Lloyd's paid £2.5bn in fees to join the APSE, but did not ultimately participate, while losses at RBS are unlikely to be large enough for the bank to call upon the guarantee of taxpayer money, for which it has so far paid £1.4bn.

UK taxpayers are currently breaking even on their 83% shareholding in Royal Bank of Scotland and 41% of Lloyd's TSB, when dividends and other earnings are taken into account.

Receiving a profit from the holdings would be a welcome boost for a coalition Government fighting to fill the hole in the national finances left by the banking crisis, but would also be hailed by Labour as a vindication of the strategy adopted by former prime minister Gordon Brown and his chancellor Alistair Darling in dealing with the crisis.

The Banker's editor, Brian Caplen, said: "While the banks remain at fault for decisions that led to some of them needing a rescue package, the UK taxpayer could make a significant profit from bailing out the banks by 2015."

Meanwhile, the Republic's Justice Minister Dermot Ahern has denied claims that Fianna Fail and its coalition partner, the Green Party, are at odds over government policy on the future of nationalised Anglo Irish Bank.

Mr Ahern said all parties shared the same goal - to find the cheapest and most effective way to restore the banking system.