HBOS & RBS 'almost went under' - from BBC News website

HBOS and RBS 'almost went under'

Mr King said deposits would have been frozen if the banks had collapsed Two UK banks almost collapsed in October last year, the governor of the Bank of England has revealed. HBOS - now part of Lloyds Banking Group - and RBS were within hours of going under, Mervyn King told BBC Two's The Love of Money programme. Just days after the near-collapse, the government launched a £37bn rescue package for banks, taking stakes in RBS and the merged Lloyds TSB and HBOS. The chancellor has called the situation "the worst faced in peace time". Mr King described how strains in the money markets came to a head on 6 October and 7 October last year. "Two of our major banks which had had difficulty in obtaining funding could raise money only for one week then only for one day, and then on that Monday and Tuesday it was not possible even for those two banks really to be confident they could get to the end of the day," Mr King said. He went on to describe the consequences if the banks had run out of liquidity. "Individuals would not have had access to the money in that bank. Their deposits would have been frozen," he said. The full interview with Mervyn King can be seen on The Love of Money, at 2100 BST on Thursday, 24 September, on BBC Two.