The £50bn recapitalisation of Britains eight largest banks, with the state providing £37bn for Royal Bank of Scotland, HBOS and Lloyds TSB, was based on business models that assumed a small amount of loan growth. However, as the political clamour to extend lines of credit to small businesses has grown, top industry figures fear banks will have no choice but request more state money.
Highlighting the tension between the industry and Government, one source said: If someone wants them to do more lending than they had wanted, then they will need more capital. The banks were planning to grow their balance sheets but not by as much as the politicians seem to want them to at the moment.
The Financial Services Authority instructed each bank in October to raise capital on an eight, six, four basis, where core tier one ratios had to be raised to 8pc and remain above 4pc in the event of an extreme recession. To establish how much capital was needed, the FSA took into account the banks business plans.
However, the volume of lending the Government appears to be demanding is significantly more than those plans envisaged. Added to which, the sharp cut in interest rates – from 4.5pc to 2pc in the past two months – is squeezing profit margins more than expected. Under the banks plans, profits would also be used to replenish capital.
Simon Ward, New Stars economist, said: It is not just the volume of lending but the interest charge thats the issue. If banks are being asked to lend significantly more without fully pricing in the risks that puts their capital positions in jeopardy and may mean they need a further capital injection in a year or two.
Bank of England Governor Mervyn King has refused to rule out the prospect of further state support, recently warning that we may not have come to an end in the process of recapitalisation.
Senior insiders believe further capital injections are not the only way of addressing the issue. They believe the Government could also make its support package cheaper, thereby helping the banks generate profits.
The recapitalisation programme includes expensive funding – a 12pc coupon on £9bn of preference shares and punitive charges on the £250bn loan guarantee scheme to help the institutions fund in the wholesale markets. No other country to have mimicked the UK plan is so expensive. The US, for example, is charging a coupon of just 5pc on the preference shares.
The pressures on banks prompted an angry statement today from Michael Coogan, director general of the Council of Mortgage Lenders. He said: “To different degrees lenders are facing conflicting pressures to recapitalise against possible future losses, service Government’s preference shareholdings at 12pc, pay a premium to access the Bank of England Special Liquidity Scheme, show forbearance to borrowers in arrears, follow base rate moves down to help their existing borrowers, keep savings rates high to support existing savers, and provide competitive rates to new borrowers and savers to maintain economic activity in a recession.
“Current policy objectives are conflicting and incoherent. The Government needs to decide on its key priority. The tug of war with lenders being pulled in every direction at once needs to end. We believe the Government urgently needs to review the cumulative effect of the approach it has taken in the recapitalisation process on large lenders’ willingness and capacity to lend.”
Mr Ward added: “Banks are being asked to subsidise the risks of their customers, so the Government ought to offer more of a subsidy to them in its support facilities.” Gordon Brown and Alistair Darling are thought to be resistant to the idea because they are keen for the recapitalisation scheme to be seen as good value for the taxpayer.

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In recent years, those who deal with insurance companies are most likely to come across the following term: life settlement. For a clearer picture in the minds of those who are unfamiliar with this, lets find out the answers to the following questions: What is life settlement? Who is it meant for? And finally, why?
First of all, a life settlement is a contractual right gained by an agreement between the insurance policy owner and the third party, which can be an institutional investor or enterprise in which an unneeded or unwanted life insurance policy is sold in the secondary market. The purchaser becomes the new beneficiary of the policy and takes the responsibility of further premium payments. The maintenance of the life settlement is carried out by the purchaser until the insured persons death. Afterwards, the new beneficiary profits from the life settlement.
But who is the insured person that is likely to deal with a life settlement? And what are his/her motives in doing that? The answers are quite simple. The age of the insured party who is selling the policy must be at least 65. Those retired seniors with a life insurance policy, who have paid off the mortgage as well as their childrens education can consider their insurance policy served. Therefore, subsequent premiums are likely to be nothing but a waste of money and the insured may want to regain the money already paid for the insurance.
This is possible by selling your life insurance policy and signing a life settlement. By doing so you free yourself from obligations of unwanted premiums and get a considerable amount of money to manage the rest of your life at your leisure.
Photo: © don.

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From the earlier times, Indian people have been quite artistic and it reveals in the works of painting from time to time. While classifying these paintings, two forms are being found. One is murals and the other is miniatures. It is believed that the miniature painting developed in western India during the 16th to 18th century. The origins of Madhubani painting is believed to take place at the time of the Ramayana, when King Janak commissioned artists to do paintings at the time of marriage of his daughter, Sita, with Sri Rama. Mughal painting is the blend of Indian, Persian and Islamic styles. Modern Indian Paintings are often inspired by Indian themes and images.

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You dont have to be a solo publisher when it comes to creating content Online. I know too many people who seem to think that, going it alone is the best tactic when it comes to getting a web site out there, ready for the masses.
Where would Batman be without the trusty boy wonder? Bringing in a sidekick to help fight crime lessen the workload might be a good idea.
Spread the Work Around
A web site, both big ones and small ones, can be a lot of work. You have to get content out there, make sure your getting in the search engines, manage the back-end of things and more. Distributing the work around to several people will lighten the stress and will also get the work done faster.
Easier Way to Get Feedback in a Hurry
Lets say you have an idea about a new feature of your web site you want to add, but your not sure if it is the right step to take. If you had somebody working with you, you could bounce the ideas off of them. In life, we like to surround ourselves with people on our same wavelength. If you do this with your Online business, you are bound to be able to convey your ideas easier and see if anybody else thinks they are any good.
Delivering a Wider Range of View Points
This last bit of advice would work best for bloggers out there. Reading the same views from the same person might not be the best way to keep your readers happy. You run the risk that people grow tired of that one person, and they want to hear views from others. If they dont work for you 24/7 - maybe you can work out an arrangement where you both guest blog for each other? The possibilities are endless.
Now working as a team rather than as a single person might not work for every web project out there, but it is worth a shot. If you find your becoming un-inspired and over-worked, getting a buddy in on your web empire might be the best way to lessen the stress on you alone.

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