Mervyn King suggests compensation scheme

Grovelawn Financial News 11/06/2008

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Scheme would aid victims of credit crunch

The Governor of the Bank of England, Mervyn King, took the opportunity yesterday to suggest to the country's main bank's chief execs that they might want to consider a new compensation scheme. The scheme would benefit savers who lose money in a bank's collapse.

The 350 delegates attending the conference heard the governor say that he knew his suggestion would be an unpopular one but that it was wise for banks to make upfront payments in to the scheme with "some element of prefunding" as natural. Angela Knight the British Bankers' Association's chief executive, however, said that her view was that prefunding was not essential, what was more essential was that payments should be made quickly within a system that consumers trust. Banks already belong to a scheme that which makes them liable for levies up to £4 billion a year.

The banking industry has made 80,000 job cuts worldwide and have made writedowns of £204 billion as a result of the credit crisis. The chairman of Europe's biggest bank HSBC, Stephen Green, said that he did not feel that the credit crisis was yet over.

← Mervyn King outlines his objectives for second term | News For June 2008 | QIA pumps billions into Barclays →

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