Treasury pays 107m in fees

THE Treasury expects to have spent &pound;107m by April 2010 on legal and financial advisers to sort out the banking crisis, a report from the National Audit Office revealed today.<br /><br />The legal firm Slaughter and May tops a table of fees paid for services with a bill of &pound;32.9m, followed by Credit Suisse with &pound;15.4m.<br /><br />Two sets of financial advisers were appointed, from Credit Suisse and Deutsche Bank, on retainers of &pound;200,000 a month for a year. <br /><br />But the Treasury should recover around &pound;100m &ndash; the vast majority &ndash; from Royal Bank of Scotland and Lloyds Banking Group, the NAO said.<br /><br />In negotiating the Asset Protection Scheme, the government&rsquo;s bank insurance scheme, Lloyds agreed to commit to lend an additional &pound;14bn &ndash; &pound;3bn for residential mortgages and &pound;11bn for businesses. RBS agreed to lend an additional &pound;25bn &ndash; &pound;9bn for residential and &pound;16bn for businesses.<br /><br />RBS and Lloyds are on track to meet their retail mortgage lending commitments, the NAO said. But they are unlikely to meet their commitments for businesses.<br /><br />The only formal sanction available if the banks fail to meet targets is a potential refusal to extend guarantees for wholesale borrowing under the Credit Guarantee Scheme.<br /><br />Amyas Morse, head of the National Audit Office, said &ldquo;lessons must be learnt&rdquo;.<br /><br />&ldquo;The authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers,&rdquo; he said.<br />