Bailout banks let off £30bn loans failure: Treasury refused to punish Lloyds and RBS, say MP's - 20th Apr 2011

Taxpayer-backed banks were not punished by the Treasury when they withheld vital lending from business, a committee of MPs will say today.

Loans to businesses from Lloyds and RBS fell £30billion short of the Government target, a Public Accounts Committee report has revealed.

The Treasury said that the potential sanctions it considered outweighed the benefits of punishing RBS, which is 84 per cent owned by the taxpayer, and Lloyds, which is 43 per cent in public hands.

RBS missed its target by £22billion, while Lloyds missed its target by £8billion.

That tight credit supply was blamed by experts for restricting the level of spending in the economy and stifling growth.

Margaret Hodge, chairman of the committee, said: ‘The Treasury appears to lack strong determination to use its influence to increase lending to small businesses.
‘We expect it to find effective mechanisms to ensure the banks meet their lending commitments.’

The banks were also admonished for failing to provide information to the Treasury to ensure that their assets were not linked to fraud or other crimes.

The committee stated: ‘It raises questions on the management controls within the banks, the efficacy of regulatory oversight and the quality of audit provided to the banks. Read More