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Page last updated at 10:29 GMT, Tuesday, 22 September 2009 11:29 UK
Banks reply to Panorama

Lloyds Banking Group, Northern Rock and Royal Bank of Scotland all featured in Panorama: Banks Behaving Badly? Here are the banks' responses to allegations contained in the programme.

Lloyds Banking Group

Lloyds Banking Group aims to comply at all times with all its obligations under tax law, both within the UK and overseas. We treat very seriously our obligations to comply with all tax legislation and we believe that we do so.

Offshore subsidiaries:

It is common practice for organisations such as ours with an international presence to have offshore subsidiaries, which can be used for a number of purposes, from providing expatriate banking services, to facilitating the administration and funding of international operations.

Transfer of funds between subsidiaries:

The transfer of funds to and between subsidiaries is a normal business activity for large companies. We can confirm that the transfer mentioned to us by Panorama involved Cayman Island and British Virgin Island companies. Both of these jurisdictions provide a legal framework with regard to repatriation of capital that is more flexible than the legal framework for UK companies. The transfer involving the British Virgin Islands subsidiary was made based on guidance from the FSA on their new rules relating to the funding of non UK subsidiaries by banks. The FSA was notified of the transfer shortly after it took place. For the avoidance of doubt, the Group did not pay less tax as a result of this transfer, as the companies concerned are resident in the UK for tax purposes and consequently pay UK tax on their profits.

We strongly and categorically refute any allegation of involvement in systematic or deliberate tax evasion.

Providing advice to customers:

The orderly and efficient management of an individual's tax affairs, within the law, is a legitimate exercise. Any advice or information we offer customers is made within the context of the robust anti money-laundering systems and processes we have in place. These processes are designed to ensure that colleagues are able to identify and report any suspicious activity on the part of our customers. Colleagues are provided with regular training as appropriate to ensure compliance with these systems.

Individual employees:

We have been provided with information by Panorama which could suggest serious misconduct by a member of staff in one of our Jersey offices. We take these allegations by Panorama very seriously and a full and comprehensive investigation into this matter is already underway. The member of staff has been suspended pending the outcome of our investigation. If the investigation concludes that serious misconduct has occurred, then the company will take the appropriate disciplinary action.

The group has shared the main elements of its approach with HMRC and the appropriate regulatory authorities and will continue to do so.

Northern Rock

Northern Rock has revised its business plan in close consultation with the government and awaits European Commission approval for State Aid. As previously announced, under the revised plan the Company has ended its active mortgage redemption programme and plans to offer new mortgage lending of up to £14 bn in 2009/10, to help provide capacity in the mortgage market.

All residential mortgage products are available to first time buyers and the Company has increased its residential mortgage lending activity, with the value of lending applications in the second quarter of 2009 double that of the first. All lending is made on a prudent basis, to creditworthy borrowers, regardless of whether they are returning Northern Rock customers, moving from another lender or first time buyers.

Northern Rock Group informs and reminds account holders they are responsible for declaring the interest earned from their savings to their tax authority, and recommends that customers seek independent professional advice where appropriate to ensure the financial arrangements they put in place are suitable for their specific circumstances, and that they understand any reporting requirements that might arise from those arrangements.

Northern Rock plc refutes any suggestions that its subsidiary is behaving inappropriately and would reiterate that Northern Rock Guernsey informs and reminds all account holders that they are responsible for declaring the interest earned from their savings to their relevant tax authority.

Royal Bank of Scotland

No bank is doing more than Royal Bank of Scotland (RBS) to stimulate and encourage demand amongst Small and Medium Enterprises and homeowners in the UK. No bank has done more than RBS to support its customers during this harsh economic climate. The money is available and we are open for business.

Responsibility for the role RBS played in the crisis has been allocated and accepted and the relevant leaders have left the company. Everyone at RBS fully recognises that we are in a privileged position to be able to restructure and fix our company with the government support behind us. We only enjoy that support so that we can help our customers and communities and serving them as well as we can is at the heart of our turnaround plan. We have made very substantial changes to the business we do and the way we do it. We owe it to everyone - customers, staff, shareholders and the wider public - to make the bank safe and successful. We are working flat out to do deliver and to allow the government to sell the public stake in RBS at a profit.

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