By IRNA,
London : Britain’s banks may soon demand a further bailout from the government despite the massive £1.2 trillion already being put at risk to prop up the country’s financial sector, a leading economic think-tank warned on Monday.
The New Economics Foundation (NEF) said the government needs to do more to address the borrowing requirements of the high-street banks, which still rely on funding from the Bank of England two years after the collapse of Lehman Brothers, the US-owned investment bank.
Many of the emergency funding schemes put in place during the crisis run out by the end of 2012, which means that banks need to find or replace £750 billion of funding.
NEF calculates that the banks will need to raise £25bn a month, twice the current amount, to plug the funding gap, otherwise they may need more help from the government to keep operating.
‘We believe the public sector is likely, once again, to be asked to bail out the banks for the emerging funding gap,’ says the foundation, which was set up in 1986 by the leaders of The Other Economic Summit.
It called on the British government to separate high-street banking from speculative trading in investment banking divisions and break up the big banks so that the failure of one institution would not jeopardise the whole economy.
The warning comes of the heels of the financial crisis in Ireland, where the government last week was forced to inject extra capital into the country’s stricken financial sector with fears that the total cost to save its banks could rise as high as €50bn.