The Royal Bank of Scotland is one of the leading banks globally, and it’s just gone through a quite crucial week. First of all it attempted to raise another tranche of billions of pounds of new capital by a rights issue, only to see this rebuffed by the shareholders. The major reason for the failure is said to be that the price of the shares in the offer was higher than their current market value. Although, to be fair to the bank it’s hard to see how any institution can accurately predict its share price months in advance in the Current Credit Crunch.

This refusal then obliged the government to step in & purchase more shares in the bank in order to provide the required capital. The government, on behalf of Tax Payers is presently by far the biggest shareholder in the Bank with around sixty percent of the shares.

Simultaneously with this deal was going through, the Chancellor of the Exchequer said that, if required, he was going to “hold Banks’ feet to the fire” in order to make them abide by the government’s wish that all the UK financial institutions would use their government injected cash to maintain their lending to small businesses and Home Buyers. The Chancellor also made it abundantly apparent that he expects banks to allow a lot more time for House Buyers to bail themselves out when they get into problems with their mortgages. He expressed the opinion that there ought to be a minimum of six months delay before any legal recovery actions are taken. This should, he insisted, offer Home Buyers who’ve lost their jobs time to find new employment and start to get their finances back in order.

The government’s thinking behind this is to bring some level of confidence back to the House Sales UK market, and as a result, in turn, to give families and couples the confidence they need to Buy Houses once more.

It was no real revelation therefore when the Royal Bank of Scotland announced on 1st December that from now on, it will not open any recovery actions against House Buyers who are in arrears until a minimum of six months after the arrears begin.

The Bank also announced that its current lending to small businesses is just as high as it was this time last year.

The government must now be hoping that these actions will oblige the other major High Street Banks to follow the Royal Bank’s lead, and that the collective effect of all the Banks and Building Societies will give a boost in confidence to small businesses, employees and Home Buyers. This in turn should bring back some degree of normality to the House Sales UK market.

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