By Edmund Conway
I’ve used my elementary Photoshop skills to add those blue lines that mark where the emergency loans for the banks began and ended. Look at the right hand graph – the assets side of the balance sheet – and in particular the purple bit that denotes “other assets”. That includes the currency swaps and, according to Simon Ward of Henderson (the City’s big expert on these complex central bank balance sheets), most likely the emergency loans as well. And, indeed, note how there is a pretty big bulge between October 08 and late January 09 – the precise period when the loans were being issued.
So the answer is that hiding this much money is actually pretty damn easy when there’s all manner of financial chaos going on. It is a finding that will definitely cheer the Bank of England, which rather likes the idea that it can step in and save a bank without anyone finding out and causing another Northern Rock. Not that RBS or HBOS ended up in a much better state in the end, but that’s another story.