Both RBS & Lloyds Banking Group have missed all the lending targets set by Chancellor Alistair Darling…by miles. But there will be no reprisals.
In the continuing poker game between bailed-out UK banks and the Treasury, it’s a case of who blinks first. Usually Clerical Ali does the blinking, and this latest episode is no exception.
The first Judgement Day for lending levels arrived last week. But City sources tell me Darling and the banks didn’t even bother to have a meeting about the huge undershoot in previously agreed bank lending levels.
The Treasury could say “Right – you’re not playing ball, so here’s the penalty”. To which Brokebank Mountain would retort “Dish out a penalty, and we’ll tell everyone why we can’t pay it”.
The Treasury could in turn retort, “Tell the markets how skint you really are, and the next day you will be an ex-bank”. To which the bankers would reply, “True – and you’d have a run on the Treasury”.
It is a Mexican stand-off: but Darling and Britain have far more to lose than the likes of Eric Daniels.
Had one put this scenario in a novel three years ago, it wouldn’t have attracted an agent,let alone a publisher.