Outlook The scale of the loans provided in October 2008 to HBOS and Royal Bank of Scotland are breathtaking, but the fact the Bank of England has managed to keep them secret until a time of its own choosing is also interesting. A little over a year previously, when news leaked out that the Bank was providing emergency funding to Northern Rock, there was a noisy protest that the lender of last resort could no longer intervene discreetly before banking crises got out of hand. But this is exactly what the Bank then managed to do at HBOS and RBS, thanks to new powers given to it following the Rock affair.
More importantly, whether the Bank's interventions remained a secret or not seems to have made no difference to the final outcome. Northern Rock was, in the end, nationalised in order to save it from total collapse. Both HBOS, even after being taken under Lloyds's wing, and RBS suffered the same fate, even if shareholders have retained stakes.
Indeed, the Bank's insistence yesterday that it had no choice but to keep these loans secret seems odd. It could have disclosed them at the time, adding that the Government stood squarely behind both institutions and would not allow them to fail under any circumstances.
In any case, it was clear last autumn that both banks were already drawing very heavily on emergency support such as the special liquidity scheme, and it's not as if no-one knew they were in difficulties. Indeed, yesterday's disclosure of this "emergency liquidity assistance" as the Bank describes it, should be followed by publication of much greater detail of which banks have used other facilities, and to what extent.