Alistair Darling: 'RBS said they would run out of money in early afternoon'

Pound Coin

Alistair Darling has revealed his “most scary moment” of the financial crisis which began a decade ago.

The former Labour chancellor of the exchequer said he received a shocking phone call from Royal Bank of Scotland in 2008, revealing a run on the bank.

He told the BBC: “I had to go to one of these meetings of European finance ministers, and I was asked to come out and take a call from the then chairman of RBS [Tom McKillop], who said the bank was haemorrhaging money.

“Remember this was not only the biggest in the world, it was about the same size as the entire UK economy.

“I said to him, ‘how long can you last?’ And what he said to me shook me to the core. He said, ‘Well we’re going to run out of money in the early afternoon’.”

Lord Darling said there would have been “blind panic” had the government not intervened. RBS was bailed out by taxpayers later the same year, and the government still owns a 71% stake in the bank.

He added that the biggest danger regarding a future crisis was complacency.

“In a few years’ time when institutional memories start to fade, and the people around have all gone and retired, then that’s where the risk occurs,” he said.

Wednesday marks the 10th anniversary of the decision by BNP Paribas to suspend three of its funds with major exposure to bonds backed by US sub-prime mortgages. The French bank said at the time it was unable to place a value on them because the market for these products, or “securities”, had dried up.

Powered by Guardian.co.ukThis article was written by Angela Monaghan, for theguardian.com on Wednesday 9th August 2017 08.59 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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