Darling warns RBS could still need more money - papers

RBS may need more taxpayer funds to nurse the state-controlled lender back to health, Alistair Darling said yesterday hours after announcing a £33.5bn bailout package for the bank — the biggest of its kind in the world.

Unveiling details of increased bailout funds for RBS and Lloyds Banking Group, the Chancellor told MPs that RBS "may need more capital" in order to help the bank to return to stability, The Times reports.

The Treasury said that it would inject a further £25.5bn of taxpayers' funds into RBS to prop up the lender, along with a new £8bn pot of reserves intended for emergencies only. Mr Darling also announced a new capital injection of £5.7bn for Lloyds, in which the Government holds a 43% stake. The total bailout for the two banks now stands at £76bn, the equivalent of almost 17p in the pound for every taxpayer. Full story...

The extra interest taxpayers will have to pay on the national debt in future years is equivalent to the entire Transport budget, the International Monetary Fund said in an unusual direct warning to Britain.

According to The Telegraph, the IMF singled out the UK as being at significant risk from the threat of rising debt interest costs as it absorbs the effects of the financial and economic crisis. It said that the proportion of UK taxes that will go towards financing the national debt will, in five years' time, be double what it was just before the onset of the crisis.

It said: "Just the increase in interest spending in the United Kingdom is about twice annual outlays for environmental protection and is equivalent to annual spending on public transportation."

The surprising bluntness of the warning, which was contained in a broader document analysing the fiscal situation in a variety of countries, will be seen as a direct rebuke to Gordon Brown, who repeatedly ignored IMF advice in previous years to cut the deficit and leave the UK better-placed for future downturns. Full story...

Commerzbank has filed its defence against a lawsuit in the High Court from more than 80 City bankers who are suing for €33m (£30m) worth of unpaid bonuses in the biggest case of its kind in the UK, reports The Financial Times.

The investment bankers claim that Commerzbank and Dresdner Kleinwort, which the German bank acquired last year, reneged on explicit promises to pay their bonuses in full. The amounts being sought in the case range from €45,000 to €1.67m.

The dispute centres on a €400m bonus pool set aside by Allianz, Dresdner Kleinwort's former owner, in 2008 to retain staff.

In its defence document, Commerzbank calls the bankers' claims "misconceived" and alleges that each of the claimants was entitled to be considered for a discretionary bonus but that "none of them was entitled to be paid a bonus in any year, let alone to be paid a bonus of any particular amount". Full story...