HC Deb 06 March 1995 vol 256 cc74-5W
Mr. Austin Mitchell

To ask the Chancellor of the Exchequer what is his estimate of the cost to public funds for the Bank of England of the Bank's offer to provide liquidity for the rescue of Barings; and if he will instruct the Bank to make no further offers of this nature.

Mr. Nelson

[holding answer 2 March 1995]: As my right hon. and learned Friend told the House on Monday 27 February, the Bank of England stands ready to provide liquidity to the banking system to ensure that it continues to function normally. There was no rescue of Barings and the Governor did not recommend that public funds should he used for this purpose.

Mr. Mackinlay

To ask the Chancellor of the Exchequer what assessment he has made as to by what method and to what extent the asset management arm of Barings is ring fenced to protect it from any disadvantageous situations arising in its other divisions; and if he will make a statement.

Mr. Nelson

[holding answer 2 March 1995]: Barings is now in the hands of the administrators. The regulatory requirements applying to fund management should protect the fund management arm from losses elsewhere in the group, but any investors' cash balances held on deposit at Barings Bank will he frozen. Current discussions between the administrators and the ING Group raise the prospect that a favourable settlement may be obtained.

Mr. Mackinlay

To ask the Chancellor of the Exchequer if he will make a statement on the position of local authorities who had money on short-term deposit with Barings bank; and if he will make a statement.

Mr. Nelson

[holding reply 2 March 1995]: The administrators are currently engaged in identifying the options for realising maximum benefits for creditors of Barings. Current discussions between the administrators and the ING Group raise the prospect that a favourable settlement may be obtained, but until the administration order is lifted, deposits remain frozen.

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer if he will make it his policy that no public money will be used directly or indirectly in any attempt to rescue Barings and that the Bank of England should not put any of its own money at risk in such a rescue attempt.

Mr. Nelson

[holding answer 2 March 1995]: As my right hon. and learned Friend, the Chancellor told the House on Monday 27 February, the Governor did not recommend, and in any event he would not have agreed, that public funds should be used to rescue Barings.