Tuesday, October 07, 2008
A UK banking rescue
Posted by David Smith at 07:00 PM
Category: Thoughts and responses

Details are sketchy but the UK government appears to be on the brink of announcing a comprehensive banking bail-out. It follows a torrid day for the banks on the markets. Here's the BBC's report.

This is from the FT:

Gordon Brown, the UK prime minister, on Tuesday night ordered a massive taxpayer-backed cash injection to rebuild the balance sheets of Britainís high street banks, effectively part-nationalising the sector at a cost of tens of billions of pounds.

Faced with an intensifying banking crisis, Mr Brown sanctioned moves for the taxpayer to recapitalise leading banks, in a bid to restore confidence in the system and to encourage them to start lending again.

The total cost of the scheme was estimated at between £35-£50bn, which is expected to be executed through the government acquiring preferred shares. Mr Brown is expected to insist the taxpayer receive generous dividends and profits on the deal if share prices recover.

Update: Here's the Treasury's press notice.