Page last updated at 11:48 GMT, Sunday, 8 March 2009

Bank nationalisation 'not needed'

Halifax and Lloyds signs
The government has increased its stake in Lloyds Banking Group

Lord Mandelson has reiterated that the government has no plans to nationalise the banking sector.

His comments come two days after the government increased its stake in Lloyds Banking Group to 65% from 43%.

Speaking on the BBC's Andrew Marr show, the business secretary said nationalisation would not be either "necessary or desirable".

Lord Mandelson admitted banking regulation should have been stronger, and change was now needed globally.

'Influence'

Speaking in regard of the government's increased stake in Lloyds, and its 68% share of RBS, he said he remained "pretty confident" that taxpayers would "eventually" get something back.

Lord Mandelson: 'In the longer term, the taxpayer will get quite a lot back'

Ruling out full nationalisation, such as happened at Northern Rock, he said the majority ownership model at Lloyds and RBS enabled the government to "exercise a great deal of influence... without taking that final step of removing the shareholders".

And, admitting that UK banking regulation "might have been wider and tougher", he said that effective reform of the regulations could only be achieved globally.

He said matters to address this would now be discussed at next month's meeting of G20 global leaders, which will take place in London.

Turning his attention to the UK economy, he said that while we will "start to see changes taking place in the economy this year", the government was not "going to put a timetable on when the recovery will take place".

'Sceptical'

Chancellor Alistair Darling has described the government's increased stake in Lloyds as a "vital step to get banks lending again.

As part of the deal, the government will insure 260bn of the bank's toxic loans, under its Asset Protection Scheme.

Shadow chancellor George Osborne said taxpaxers would remain sceptical until they saw lending start to flow again.

"The real question is, are we going to get value for money?" he said.

"Because Britain has now spent more on bailing out its banks than any other country in the world, given our size, and we've got precious little to show for it."



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