The government's banking investments are to be managed from arms length.
A new body has been set up to oversee the government's shareholding in those banks that have subscribed to its recapitalisation fund. Alistair Darling announced that UK Financial Investments Limited (UKFI) - which is wholly owned by the government - will manage the investments on a commercial basis.
The aim of the new organisation is to create value for taxpayers, who are likely to end up with large stakes in Royal Bank of Scotland and the merged Lloyds TSB and Halifax Bank of Scotland. It will be chaired by Sir Philip Hampton, a former finance director at Lloyds TSB and the current chairman of Sainsbury's.
Initially, UKFI will manage the government's stakes in the three banks taking a share of its £37 billion bailout fund, although there are plans to extend its remit to cover investments in Northern Rock and part of Bradford & Bingley "in due course".
All of the banks in question will keep their own independent boards and management teams which will determine the individual strategy of each institution. However, UKFI will work to ensure that the banks continue lending to homeowners and small businesses.
The unveiling of the new body comes after Alistair Darling faced questions from the treasury select committee about his handling of the banking crisis. He admitted there were "lessons to be learned" from past events.
