Mervyn King suggests future banking bailouts will be required
Mervyn King, the Governor of the Bank of England, has today suggested that further UK banking bailouts will be required in order to turn around the ailing financial industry. In what many see as a thinly failed attack on the UK government, Mervyn King was also critical of government levels of debt prior to the credit crunch after a period of sustained economic growth which should have seen money put aside for a "rainy day". However it is the suggestion that further banking bailouts will be required which is causing most concern in the city.
The government's £500 billion toxic asset insurance program would appear to be well short of the mark with news that Royal Bank of Scotland is in the process of using the service to insure around £300 billion of its own toxic assets leaving very little for other UK banks. Despite assurances from many investment analysts that some of these toxic assets will have value in the future it is still a massive risk and the initial £500 billion program could be doubled in due course.
If the UK economy continues to decline, this will place more and more pressure on the UK banking system with many experts predicting the nationalisation of more UK banks in the future.
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