Economics of Commercial Bank Bailouts

​In this revision video we look at arguments for and against bailing-out the banking system during a financial crisis.

The UK government under Chancellor Alistair Darling and Prime Minister Gordon Brown took the decision to launch a multi-billion-pound bail out of the financial system during the Global Financial Crisis which reached a peak in the Autumn of 2008 with the bankruptcy of Lehman Bros in the United States. Four major commercial banks were given a financial life-line although not every bank required one, for example Barclays (later to become mired in controversies of its own).

Royal Bank of Scotland (government acquired 84%) – still retains around 60%
Lloyds Banking Group (government acquired 43%) – all shares now sold
Northern Rock (100% nationalised) – sold to Virgin Money (2012)
Bradford and Bingley (100% nationalised - 2010, Bradford & Bingley was renamed Santander UK

Total spend on UK bank bail outs estimated at £137 billion, net spend is around £23 billion (Source: 2018 Parliamentary Research Reports)