Bailed-out banks 'nationalised' - commercial mortgages

20 February 2009

It has been announced that bailed-out lenders the Royal Bank of Scotland (RBS) and Lloyds Banking Group are to be classed as public sector organisations.

The Office for National Statistics unveiled the move, which could have an effect on holders of commercial mortgages with the banks.

As the lenders have been supported with public money, the ONS decided that the government has the ability to control their corporate policy.

Lloyds TSB itself was not bailed out but has taken on the beleaguered HBOS group, which would have collapsed were it not for an aid package.

Commenting on the move, Liberal Democrat shadow chancellor Vince Cable said that the government "has in effect nationalised RBS and has a substantial stake in Lloyds".

He added that ministers must "accept the reality" that they effectively own two large lenders and "use them to ensure the flow of much-needed credit into the economy".