Barclays Bank at loggerheads with the UK Treasury
It has been revealed today that Barclays Bank is in a similar situation to that experienced by Lloyds Bank which had great difficulty agreeing a toxic asset insurance plan with the UK Treasury. Up until now Barclays Bank has very much depended upon its own financial resources to get by but like so many financial institutions in the UK is being forced to take up the option of insuring a portion of its so-called toxic debt. So what exactly is the problem?
The problem seems to be in that Barclays Bank is only willing at this moment in time to insure £20 billion of potentially toxic debt whereas the government is pushing for a figure of £80 million as a safety net for the future. The massive difference between the two sides could delay an application from Barclays Bank which needs to be with the Treasury by 31 March. This is not the first time the UK government has played hardball with a UK bank, with Lloyds Bank having to pay significantly higher premiums than those afforded to Royal Bank of Scotland.
It will be interesting to see how Barclays Bank responds as the deadline approaches because in many ways the UK government has the leading UK banks over a barrel.
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