Page 27 - RBS GRG F Teaching Note
P. 27
The 2008
financial crisis
witnesses
dramatic falls in
property prices
which meant
that the bank’s
shareholders
and customers
lost billions of
pounds on bad
loans. Assets
values plummet
Diagram 8
and businesses
struggled.
For the bank government pressure to reduce its loan
exposures, coupled with the opportunity to raid the cash,
equity, and assets of businesses going under, gave the bank
a powerful incentive to pull the plug on thousands of its
customers. (25)
Government’s Three Main Goals
1. Pressed the bank to reduce its exposure to property
loans
2. Required RBS to increase its capital reserves as a buffer
against losses
3. Pushed for the bank to make more money overall, so
that it could increase its lending to new businesses to
aid the economic recovery and sell its stake
