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Were RBS and HBOS on the verge of collapse earlier this year?

A BBC panorama report has this evening suggested that without access to funding from the Bank of England we could have seen Royal Bank of Scotland and HBOS collapse as the banking crisis hit home earlier this year. This accusation, which appears to have some backing from the banking authorities, perfectly illustrates the serious nature of the ongoing economic crisis in UK which has been deeper and more severe than any other in recent memory.

It was also revealed that the Bank of England provided the UK banking system with loans and guarantees of around £350 billion as a way of stabilising the sector and preventing the collapse of any major UK banks. While the situation seems to have improved over the last few weeks many are now starting to point the finger of blame at the Bank of England with suggestions that they reacted too late to the ongoing problem. However, it is easy to blame the Bank of England after the event because at the time nobody in the UK or around the world had even contemplated such a situation.

A collapse of the UK banking system would have literally smashed the economy to pieces and left the UK staring possible bankruptcy in the face.

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