United Kingdom: HBOS and RBS Emergency Liquidity Program, 2008

Bailey Decker () and Jack French ()
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Bailey Decker: YPFS, Yale School of Management, https://elischolar.library.yale.edu/journal-of-financial-crises/
Jack French: YPFS, Yale School of Management, https://elischolar.library.yale.edu/journal-of-financial-crises/

Journal of Financial Crises, 2025, vol. 7, issue 1, 464-494

Abstract: Two United Kingdom-based banks, Halifax Bank of Scotland (HBOS) and Royal Bank of Scotland Group (RBS), faced substantial liquidity needs during fall of 2008. To provide funding until recapitalization, the Bank of England (BoE) extended ad hoc emergency liquidity facilities to HBOS on October 1 and to RBS on October 7, 2008, comprising US dollars (USD) and British pounds sterling (GBP). As collateral for the 2008 assistance, HBOS and RBS posted pools of loans that were ineligible for the BoE's market-wide operations. Aggregate usage of the two ad hoc facilities peaked at GBP 61.5 billion (USD 106.0 billion) on October 17. The banks also received support from broad-based liquidity facilities, government recapitalization, HM Treasury's Asset Protection Scheme, and HM Treasury's Credit Guarantee Scheme. RBS fully repaid its liquidity assistance on December 16, 2008; it also received GBP 45.5 billion in government capital. HBOS fully repaid its liquidity assistance on January 16, 2009, the date the bank was formally acquired by Lloyds TSB with the support of GBP 11.5 billion in government capital. The BoE's lending generated about GBP 175 million in profits for the government.

Keywords: capital injection; emergency liquidity; Halifax Bank of Scotland; Royal Bank of Scotland (search for similar items in EconPapers)
JEL-codes: G01 G28 (search for similar items in EconPapers)
Date: 2025
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