Britain part nationalises eight main banks in bailout

October 8, 2008 12:00 am

, LONDON, October 8 – Britain’s government Wednesday announced a part-nationalisation of the country’s eight main banks with a bailout worth up to 50 billion pounds (64 billion euros, 87 billion dollars).

The package also includes a 200-billion-pound credit line for banks including Royal Bank of Scotland, HSBC and Barclays, the Treasury said in a statement.

The government said it would use up to 50 billion pounds of taxpayers’ money to buy major stakes in the banks, which also include HBOS, Lloyds TSB, Standard Chartered, Abbey and Nationwide Building Society.

"Following discussions convened by HM Treasury major UK banks and the largest building society have confirmed their participation in a government-supported recapitalisation scheme," the statement said.

Finance minister Alistair Darling said that the move his Labour government was making was a bold measure in response to "extraordinary times."

He told Sky News: "The taxpayers’ interest is being protected. I’m very clear that in return for all this, the taxpayer has got to see some upside."

Chancellor of the Exchequer Darling said he still did not "rule anything out" but he said the bailout package "will go a long way."

He denied that he had dithered, which critics say caused bank shares to plunge in London trading since Monday amid uncertainty over the government’s intentions.

"I wanted to announce it when the time was right, when we had got everything sorted out, we had a scheme that worked and the big banks were signed up to it," Darling said.

"And we actually finished these discussions only a few hours ago."

Shares in RBS, Barclays and Lloyds TSB had plummeted in trading Tuesday.

RBS, which owns NatWest, was worst-hit, plunging more than 39 percent, while Barclays was down just over nine percent and Lloyds TSB fell almost 13 percent.

Tuesday’s losses took the collapse in RBS’ stock to about 80 percent in the year since the credit crunch began with the collapse of the US subprime home loan market.

Just 12 months ago, RBS was riding high, leading a consortium in an attempted 100-billion-dollar takeover of Dutch bank ABN Amro.

London’s FTSE 100 index of top shares fell 1.64 percent to 4,529.64 points at the start of trading on Wednesday immediately after the announcement of the rescue plan.

Britain has already fully nationalised two British banks since the credit crunch began a year ago: Bradford and Bingley and Northern Rock.


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