Government warn RBS, Lloyds TSB and HBOS of Nuclear option

Today British banks like, Royal Bank of Scotland (RBS), HBOS and Lloyds TSB (LON:LLOY) will be warned by the UK Government that they may take the ‘nuclear option’ which will mean they will be forced into full nationalization if they do not resume lending to businesses.

The Chairman of the Commons Treasury select committee, John McFall remarked that banks should be “actively lending instead of sitting on their hands”.

Banks on both sides of the Atlantic have been warned by their governments that if they do not resume lending and start playing ball then full scale nationalization could be imminent.

Between 1991 and 1993 this same strategy proved a success in Finland, Sweden and Norway. If banks like RBS, Lloyds TSB and HBOS were under public control they could be ordered by the government to raise their levels of lending.

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