In other words, they would have to become nationalised, at least in part. Could the banks have said no? One of the revelations in Ivan Fallon’s important and recently-published book Black Horse Ride (Robson Press, £25) is that the government did have a fall-back plan of sorts. If the banks refused to issue new capital on the government’s terms and still could not finance their businesses from market sources, their outcome would be the same as it was for Northern Rock and Bradford & Bingley. The businesses would be taken from shareholders without compensation. Since RBS was, at the time, the largest bank in the world in terms of assets, the potential public relations implications were alarming, even terrifying. Alistair Darling, the Chancellor of the Exchequer, is quoted by Fallon as saying, “It crossed my mind that the banks . . . might be daft enough to take up the option of suicide — and I simply couldn’t afford a row of dead banks in the morning.”

In the event RBS and HBOS had no alternative. They had already started to borrow from the Bank of England (on a short-term basis, of course), although the full extent of their plight was not to be disclosed until much later. Barclays instead sought help from Qatar, which had surplus funds in the Western banking system because of its considerable natural gas exports. The Qatari sovereign wealth fund was persuaded to lend Barclays sufficiently large sums on inter-bank terms and to subscribe for enough newly-issued equity that it could comply with UK regulatory demands. Vitally, Barclays achieved this without taking British government money. In that sense, it remained independent and in control of its own destiny.

But there was a catch. Given the crisis conditions in which the discussions were held, the Qataris could drive a hard bargain. Suggestions were later made that Barclays received its money only after bribing top Qatari officials, a matter which led to a still-unresolved investigation by the Serious Fraud Office. At the time the Prime Minister of Qatar, Sheikh Hamad bin Jassim, was in cordial discussions with none other than the Prime Minister of the UK, Gordon Brown. (According to Brown’s memoirs Beyond the Crash, he was “urging” the sheikh “to consider investment in recapitalisation of our banks”.) The fact is that Brown and Darling, unable to overrule King on emergency liquidity assistance to Britain’s top banks, welcomed Qatar’s intervention.

In due course the Qatari sovereign wealth fund made a nice turn on the transactions. A Reuters story published about four years later put its profit at £1.7 billion, a sum that was at the expense of Barclays’ other shareholders, most of whom are British. A fair comment is that, if the Bank of England had been prepared to lend to Barclays to tide it over its liquidity strains in late 2008, possibly for a period of a few years, this loss to Britain would not have occurred. The source of the trouble was Mervyn King’s pronouncement that long-term loans to British banks were not part of the Bank of England’s remit. Suppose that a large four-year loan on commercial terms, plus a penalty, had been extended by the Bank to Barclays in October 2008. Then not only would the Bank of England rather than the Qatar sovereign wealth fund have made a profit from the interest margin, but all the dubious negotiations with an Arab sheikdom and the allegations of bribery would have been avoided.