Banks should have paid for protection

Marion Dakers
THE BAILED-OUT banks were undercharged for the toxic asset insurance scheme used to prop them up, according to the National Audit Office.

The watchdog criticised the former Treasury staff under Labour and said the department could have charged Royal Bank of Scotland (RBS) in particular up to £1.9bn more for the asset protection scheme. The troubled bank last year agreed to pay £2.5bn.

The support package has also “only been partially successful in encouraging lending to creditworthy borrowers on the scale originally envisaged”, the report said.

The NAO accepted the asset protection scheme coupled with the capital injections for banks such as RBS and Lloyds since 2008 have helped sustain financial stability.