UK banks benefit in bail-out
Huddersfield Daily Examiner (Huddersfield, England), March 17, 2009
Byline: HENRYK ZIENTEK
US insurer AIG has revealed that UK banks were among the beneficiaries of its massive state bail-out - amid mounting anger over bonus pay.
AIG said more than pounds 63.3bn was paid to banks, including Barclays, HSBC and Royal Bank of Scotland, between its taxpayer rescue last September and the end of the year.
The firm, now 80% government owned after more than pounds 119.5bn in US State aid, was condemned by US politicians over its payment of about pounds 113m in executive bonuses.
AIG came close to collapse last September after a series of disastrous deals at AIG Financial Products saw billions pumped into credit default swaps - the risky contracts that caused massive losses for the firm.
Its payout to other banks was made to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.
Barclays received payments pounds 6bn, HSBC was paid pounds 2.5bn and pounds 500m went to Royal Bank of Scotland. Goldman Sachs received the largest payment, of pounds 9.1bn.
AIG reported this month that it had made a pounds 43.4bn loss in the fourth quarter of last year - the biggest loss in US corporate history.
Many of the firm's controversial bonus contracts are with AIGFP.
It is understood that the insurer has larger total payment obligations valued at pounds 316.8m.
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