The British government summoned banking chiefs Friday to pressure them to pass on recent hefty cuts in benchmark interest rates to hard-pressed homeowners and small businesses. Reluctance by retail banks to give customers the benefit of the central bank cuts - which have brought the benchmark rate to a more than 50-year low of 3 percent - has become a hot political issue since taxpayers' money was used for a 50 billion pound bailout of the country's banking system. Many banks and building societies pulled their tracker mortgage deals - whose rates rise and fall with the Bank of England's benchmark - ahead of an anticipated cut by the Bank of England on Thursday. Still more rushed to withdraw their tracker deals for new customers, including Nationwide, the country's biggest building society, after the central bank surprised the market with a far larger than anticipated cut of 1.5 percentage points. Nationwide also said its existing tracker deal would not follow the base rate below 2.75 percent. “What you have to remember is the banks nationally and globally have lost hundreds of billions, if not trillions, of pounds,” said Jonathan Davis, director of financial advisers Armstrong Davis. But that stance is potentially damaging for the ruling Labour Party, after it injected money in the banking system as a whole, took stakes in Royal Bank of Scotland Group PLC, Lloyds TSB Group PLC and HBOS PLC, and nationalized mortgage lenders Northern Rock and Bradford and amp; Bingley to prevent their collapse. Prime Minister Gordon Brown said that banking bosses were urged at Friday's meeting at the Treasury to pass on the cuts.
