Britain banks warned to pass on rate cut

Abu Dhabi, United Arab Emirates -- Britain's business secretary, Peter Mandelson, warned the country's banks Tuesday to pass interest rate cuts along to their customers.

The Bank of England is expected to lower lending rates by as much as 1 percent on Thursday, The Times of London reported. But if the central bank lowers rates, David Hodgkinson, chief operating officer of HSBC, consumers might not see the full benefit of the lower rates themselves.

Mandelson quickly answered Hodgkinson's comment, even though the two were traveling in the Middle East with a contingent of businessmen and Prime Minister Gordon Brown.

"I have to say when official rates are being cut it's not unreasonable for the customers to expect to see some benefits," Mandelson said.

"And if it appears the banks are standing in the way of what the government is doing, then I think many banking customers are going to be asking difficult questions of the banks," he said.

Given Brown's role in the international financial crisis, "If we can't even have a response in our own country to his moves, to his decisiveness, that will come as a surprise to many," Mandelson said.

Copyright 2008 by United Press International.