Out of credit

Yet, before the North-East financial institution and the other bailed-out banks who are reporting trading updates this week, become over-optimistic about their future prospects, it should be remembered that the wider Northern Rock group, alone, still owes the taxpayer a mere 22.5bn.

Herein lies the rub for Northern Rock and its high street rivals: the Government believes that they should be doing far more to extend credit facilities to consumers and, specifically, small businesses to

kickstart the economic recovery.

However, the banks argue that they cannot afford to provide credit for risky propositions, and that their immediate priority is honouring their financial obligations to the Treasury – one reason why bank charges have increased significantly in recent times.

They also contend that the priority for consumers at present is to pay off credit, and they cannot provide loans to people who do not want to borrow money in these uncertain times.

Yet, after the public stood by the banks when Northern Rock, and others, collapsed, there is still significant evidence to suggest that the banking industry does not realise that the rules of engagement changed when it was bailed out – and that they could be doing far more to help those sound businesses that need credit to expand and assist the private sector.

That is why the banks have to balance a return to profitability, and greater responsibility over salaries, with their wider obligations to society; obligations that they are now duty-bound to honour.