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What happened and why: Maintaining financial stability across the United Kingdom's banking system

Introduction

The NAO has, for the first time, set out in full what happened in the Treasury at the time of the banking crisis, why different steps were taken and what they mean for the taxpayer. This player helps users navigate through the complexity surrounding the banking crisis and get to the detail which interests them.

This is the story of the banking crisis, what happened, and why.

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The player accompanies the NAO report: Maintaining financial stability across the United Kingdom's banking system.

Using this player

Click on the tab to the right to navigate through the issues. Each tab contains video commentary, PDF files and graphics from our report which will display in the main window.

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Alternative formats

If you would like to view any of the individual videos without launching the player, they are available for viewing or as downloadable mp4s below:

All of the text content contained within the player is taken from the main report and its appendices, which are available in PDF format from the main report page.

The only exception to this is the Key Bodies section, the content of which is available below.

Key bodies

UK Financial Investments

UKFI has the objective of protecting and creating value for the taxpayer as shareholder, ultimately through sales of the shareholdings. In doing so, any future sale process will need to balance the consequences for the structure of the industry and competition in the UK market against the proceeds secured for the taxpayer. UKFI is monitoring compliance with non-lending commitments that the banks made when they agreed to join the Recapitalisation Scheme, including remuneration of board members. The company is also responsible for the taxpayer investment in Bradford & Bingley and will take responsibility for Northern Rock in due course.

UKFI website

Treasury

The Treasury is responsible for the structure of financial regulation, the governing legislation and for accounting to Parliament for the management of problems in the financial system, and measures to resolve them. Responsibility for authorising exceptional support operations rests with the Chancellor of the Exchequer.

Treasury website

Financial Services Authority

The Financial Services Authority regulates most financial services’ markets, firms and exchanges. It also responds to problems at particular firms, for instance, by changing regulatory requirements and facilitating the injection of new capital from other parties.

Financial Services Authority website

Bank of England

The Bank of England provides liquidity insurance to the banking system and may provide emergency liquidity support in the circumstances set out in a 2006 Memorandum of Understanding between the Tripartite Authorities. An objective of the Bank is to contribute to assessing risk and enhancing the stability of the financial system. The Banking Act 2009 gave the Bank specific responsibilities for the oversight of certain inter-bank payment systems and the operation of a Special Resolution Regime for banks in difficulty.

Bank of England website

Debt Management Office

The Debt Management Office is responsible for the debt and cash management of the UK Government. Within this remit it has the role of carrying out the Government’s debt management policy of minimising financing costs over the long term, as well as minimise the cost of offsetting the Government’s net cash flows overtime. In both instances, they are required to have a regard to risk approved by Ministers. It is also responsible for managing certain public sector funds and providing lending to local authorities.

Debt Management Office website

Asset Protection Agency

The Asset Protection Agency is a new agency of the Treasury set up to manage the Asset Protection Scheme. The Scheme is intended to restore confidence in the banks and get credit flowing again, by dealing with the losses associated with impaired assets. The scheme puts a floor to banks’ exposure to losses associated with impaired assets. This should enable the healthier core of banks’ commercial business to attract investments and deposits and make loans to creditworthy businesses and households.

What happened and why: Maintaining financial stability across the United Kingdom's banking system

Introduction

Using this player

Alternative formats

Overview

Cost to the taxpayer

Findings

Recommendations

Key bodies