Bad bank demand

RBS chairman calls for toxic Covid-19 debt vehicle

Sir Howard Davies: risk

Royal Bank of Scotland chairman Sir Howard Davies wants the government to set up a vehicle to hold toxic debt left by companies unable to pay off their emergency loans.

Sir Howard has pointed to research showing that “several billions of pounds of public money” handed to companies since the 23 March lockdown is at risk.

The survey of 500 companies by the new Business Banking Resolution Service found that 56% had accessed government-backed help, such as the bounce back loan scheme (BBLS) or the coronavirus business interruption loan scheme (CBILS).

Of those, 43% did not expect to repay the loans, reports The Sunday Times.

A similar “bad bank” was set up after the 2007-09 financial crash to deal with unpaid debts.

In 2013, the Royal Bank of Scotland transferred £38.3bn of its worst loans to an internal bad bank.

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