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.
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.
If you do not have Flash installed, you can download it for
free from the Adobe
website.
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:
Overview
Download: Overview (mp4 -
30MB)
Cost to the taxpayer
Download: Cost to
the taxpayer (mp4 - 41MB)
Findings
Download: Findings (mp4 -
5.16MB)
Recommendations
Download:
Recommendations (mp4 - 6.18MB)
Transcript of
video files (PDF - 32KB)
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.