December 20, 2008

Credit remains available to households and businesses but the amount available is shrinking, John Varley told the BBC.He said he did not expect banks to start to increase their lending again until 2010 at the earliest.

In an interview for BBC1's Panorama, Mr Varley also said the banking industry should say sorry for the crisis.The programme, which looks at how Britain's banks went to the brink of collapse in October and what the future holds for the economy, includes interviews with the chancellor and leading City figures.

Talking to the BBC's Business Editor Robert Peston, Mr Varley stressed that the banks were open for business and they were still lending.But he said that a reduction in the overall quantity of debt in the economy was necessary.