Credit Guarantee Scheme closes
The Credit Guarantee Scheme (CGS) has closed following the last CGS guaranteed debt issuance reaching maturity.
The Credit Guarantee Scheme (CGS) has closed following the last CGS guaranteed debt issuance reaching maturity.
Government exposure under the CGS peaked at just under £140 billion. There is no longer any taxpayer exposure to the scheme, which has closed without any payouts.
The Financial Secretary to the Treasury, Greg Clark said:
The closure of the Credit Guarantee Scheme marks another important step on the path towards a stable financial system, and a banking sector no longer reliant on taxpayer support.
With the Special Liquidity Scheme and Asset Protection Scheme already wound up, this sees the last of the big guarantee programmes from the financial crisis come to an end.
The CGS closing follows RBS’s exit from the Asset Protection Scheme last month. During this Parliament, support provided by the taxpayer to the banking sector in the form of guarantees has fallen by over £450 billion, a drop of almost 95 per cent.
Through credit easing measures such as the Funding for Lending Scheme, the Government continues to ensure that all banks can make loans cheaper and more easily available for consumers and businesses.
Notes for editors
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The scheme opened to authorised UK banks in October 2008, including UK incorporated subsidiaries of foreign institutions that have a substantial business in the UK, and UK building societies. Total government exposure under the CGS was capped at £250 billion.
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It provided guarantees for senior unsecured debt for a fee. Should an institution have defaulted on a payment on an instrument issued under the scheme, the Treasury would have had to reimburse the holder on demand.
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The scheme drawdown window closed for new issuance on 28 February 2010.
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Until April 2012, institutions had the option to roll over some of their guaranteed debt, which could have extended the end of the scheme until April 2014.
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For large institutions, access to the extended CGS (after April 2009) was conditional on their agreement to binding lending commitments.
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The rules of the scheme were amended on 8 June 2011 to allow early repayment of CGS debt through the CGS buyback facility. This early repayment was conditional on certain conditions being met and the payment of a cancellation fee of 15% of cancelled future fees (plus any FX costs incurred by Treasury for non-sterling guarantees).
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60 institutions signed up to the scheme and 14 issued debt under the Scheme. These institutions are named on the Debt Management Office website (opens in new browser window).
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Changes to support for the banking sector in the form of guarantees:
| Scheme | Peak support drawn down (£bn) | Support at 31/03/10 (£bn) | Support at 31/03/12 (£bn) | Support at 01/11/12 (£bn) |
| CGS | 138.9 | 125 | 24.2 | - |
| SLS | 185 | 162 | - | - |
| APS - RBS | 199.8 | 153.8 | 54.7 | - |
| Contingent capital - RBS | 8 | 8 | 8 | 8 |
| Contingent capital - NRAM | 3.4 | 1.6 | 1.6 | 1.6 |
| Deposit guarantees (to NR, NRAM and B&B) | 41 | 29.8 | 14.3 | 14.4 |
| Indemnities to Virgin Money on NR sale | 0.3 | - | 0.3 | 0.3 |
| Total guarantees | 576.4 | 480.2 | 103.1 | 24.8 |