By Myles Neligan and Steve Slater
LONDON, Dec 1 (Reuters) - The company set up to manage the British state's bank holdings said it was in talks with lenders about their strategy, just as the biggest beneficiary of the government's banking bailout pledged to delay home repossessions.
UK Financial Investments Ltd (UKFI), the company set up to manage the government's bank holdings, can agree the appointment of new non-executive directors with the three banks who are taking up to 37 billion pounds of public money.
'UKFI is now in active discussions with the banks about the composition of their boards, strategy and other matters, including discussions to identify candidates with suitable expertise to fill these new positions,' it said in a statement on Monday.
It is also tasked with enforcing a commitment from the three banks taking public cash to maintain lending availability for home owners and small businesses at 2007 levels for three years.
'UKFI is putting in place arrangements to secure robust assurance that these commitments will be fully met,' it said.
The statement came hours after Royal Bank of Scotland , which is getting 20 billion pounds ($30.07 billion) of public money, promised not to repossess the homes of mortgage customers who default until six months after they first fall into arrears.
RBS, owner of NatWest bank, said the move was designed to give overstretched borrowers a chance to resolve their financial problems as falling house prices and a flagging economy put households under pressure.
Britain's biggest mortgage lenders have already committed to waiting three months before repossessing customers' homes, under an agreement announced by British finance minister Alistair Darling last week.
CONCESSIONS
Analysts said the six-month reprieve may not represent a major concession by RBS, as rapidly falling house prices have already increased banks' incentive to explore alternatives to repossession.
'Against what appears to be published industry practice, this appears quite a concession. Whether it is against what actually goes on is another matter,' said Oriel Securities analyst Mike Trippitt.
'To repossess homes you have to go through a legal process that takes six to eight weeks, and most lenders also try to help customers re-schedule their debt, so it's easy to envisage 3-5 months as a lead-in period in any case,' said another analyst, who asked not to be named.
Mortgage arrears and repossessions have risen sharply this year, reflecting the economic slowdown as well as a sharp rise in borrowing costs in the wake of the credit crunch.
The Council of Mortgage Lenders said there were 168,000 households in arrears at end-September, up 8 percent from end-June.
A total 11,300 homes were repossessed in the three months to Sept. 30, an increase of 12 percent on the previous quarter.
UKFI has taken control of a 58 percent stake in RBS, after the bank's shareholders snubbed a fundraising, leaving the government to take 15 billion pounds of shares in addition to 5 billion pounds of preference shares.
Britain will also invest up to 17 billion pounds in merger partners Lloyds TSB and HBOS, potentially giving it a 43.5 percent stake in the enlarged bank.
UKFI's mandate is to develop and execute a strategy for disposing of the investments in an orderly way. It aims to protect and create value for the taxpayer and ensure banks deliver on the commitments made as part of their recapitalisation.
RBS said its six-month grace period would remain in place until 'at least' the end of 2009, and that it would also ensure customers in arrears were given the opportunity to get independent advice. (Editing by Rupert Winchester) ($1=.6481 Pound) ($1=.6652 Pound) Keywords: RBS/REPOSSESSION (myles.neligan@reuters.com; +44 207 542 13 73) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, Dec 1 (Reuters) - The company set up to manage the British state's bank holdings said it was in talks with lenders about their strategy, just as the biggest beneficiary of the government's banking bailout pledged to delay home repossessions.
UK Financial Investments Ltd (UKFI), the company set up to manage the government's bank holdings, can agree the appointment of new non-executive directors with the three banks who are taking up to 37 billion pounds of public money.
'UKFI is now in active discussions with the banks about the composition of their boards, strategy and other matters, including discussions to identify candidates with suitable expertise to fill these new positions,' it said in a statement on Monday.
It is also tasked with enforcing a commitment from the three banks taking public cash to maintain lending availability for home owners and small businesses at 2007 levels for three years.
'UKFI is putting in place arrangements to secure robust assurance that these commitments will be fully met,' it said.
The statement came hours after Royal Bank of Scotland , which is getting 20 billion pounds ($30.07 billion) of public money, promised not to repossess the homes of mortgage customers who default until six months after they first fall into arrears.
RBS, owner of NatWest bank, said the move was designed to give overstretched borrowers a chance to resolve their financial problems as falling house prices and a flagging economy put households under pressure.
Britain's biggest mortgage lenders have already committed to waiting three months before repossessing customers' homes, under an agreement announced by British finance minister Alistair Darling last week.
CONCESSIONS
Analysts said the six-month reprieve may not represent a major concession by RBS, as rapidly falling house prices have already increased banks' incentive to explore alternatives to repossession.
'Against what appears to be published industry practice, this appears quite a concession. Whether it is against what actually goes on is another matter,' said Oriel Securities analyst Mike Trippitt.
'To repossess homes you have to go through a legal process that takes six to eight weeks, and most lenders also try to help customers re-schedule their debt, so it's easy to envisage 3-5 months as a lead-in period in any case,' said another analyst, who asked not to be named.
Mortgage arrears and repossessions have risen sharply this year, reflecting the economic slowdown as well as a sharp rise in borrowing costs in the wake of the credit crunch.
The Council of Mortgage Lenders said there were 168,000 households in arrears at end-September, up 8 percent from end-June.
A total 11,300 homes were repossessed in the three months to Sept. 30, an increase of 12 percent on the previous quarter.
UKFI has taken control of a 58 percent stake in RBS, after the bank's shareholders snubbed a fundraising, leaving the government to take 15 billion pounds of shares in addition to 5 billion pounds of preference shares.
Britain will also invest up to 17 billion pounds in merger partners Lloyds TSB and HBOS, potentially giving it a 43.5 percent stake in the enlarged bank.
UKFI's mandate is to develop and execute a strategy for disposing of the investments in an orderly way. It aims to protect and create value for the taxpayer and ensure banks deliver on the commitments made as part of their recapitalisation.
RBS said its six-month grace period would remain in place until 'at least' the end of 2009, and that it would also ensure customers in arrears were given the opportunity to get independent advice. (Editing by Rupert Winchester) ($1=.6481 Pound) ($1=.6652 Pound) Keywords: RBS/REPOSSESSION (myles.neligan@reuters.com; +44 207 542 13 73) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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