UK banks better placed to handle storm – Osborne

The Chancellor yesterday insisted that UK banks were in better financial shape than many of their European rivals, despite news that credit rating agency Moody’s had cut the ratings of 12 British financial institutions.

George Osborne claimed that the European rivals of Royal Bank of Scotland and Lloyds Banking Group were better placed than banks on the Continent, which face bigger losses on eurozone debt.

“I am confident that British banks are well capitalised, they are liquid, they aren’t experiencing the kind of problems that some of the banks in the eurozone are experiencing at the moment,” Mr Osborne said.

The Chancellor said Moody’s downgrades reflected the government’s determination to move away from guaranteeing all the big banks.

“People ask me, how are you going to avoid Britain and the British taxpayer bailing out banks in the future? This government is taking steps to do that,” he said.

“Therefore credit rating agencies and others will say, ‘well actually these banks have got to show they can pay their way in the world’.”

Mr Osborne said he was aware that Moody’s was going to downgrade the credit ratings of British banks.

He said: “As I understand it, one of the reasons they are doing this is because they think the British government is actually moving in the direction of trying to get away from guaranteeing all the largest banks in Britain.”

Asked if people should be spending or saving, he replied people had to make their own decisions.

He said: “I don’t believe in lecturing the British people. I think the British people are perfectly capable of making their own decisions about what’s right for themselves, their family.”