The financial crisis has raised questions about the sources of systemic risk and the implications of state support to banks. In particular, banks are perceived as ‘too big to fail’. In order to stimulate the debate and inform policy-making in this area, The Royal Bank of Scotland asked Oxera to conduct independent economic analysis of the value of state support provided to the UK financial sector. The study considers the relationship between state support and the size of banks; how the value of state support can be quantified; and the plausible ranges for this value to UK banks. It estimates that, under a central scenario, forward-looking state support, implied by the observed market data, would be 8 basis points per £1 of assets. For a system with a total asset value of approximately £7 trillion, this corresponds to an annual value transfer from the state of around £5.9 billion. Ongoing regulatory reforms are expected to lower the value of state support.