Email
Password
Remember meForgot password?
    Log in with Twitter

article imageBritain bails out three banks, costing $63 billion

By Owen Weldon     Oct 13, 2008 in World
The British government has made an announcement that it is partially nationalizing three British banks with up to $63 billion of taxpayers' money. The unprecedented bail-out is an important step in thawing out frozen money markets.
The British government wants to get money moving again and in a bold attempt to do so the are going to inject $34 billion worth of capital into the Royal Bank of Scotland and just less than $30 billion into Llyods-TSB and HBOS, the two institutions currently renegotiating merger terms.
This means that around 60 percent of RBS and 40 percent of a merged Lloyds-TSB HBOS will be taxpayer-owned.
Britain's Prime Minister Gordon Brown said that standing by and doing nothing was never an option.
Brown said that the government cannot just leave people on their own to be buffeted about especially in extraordinary times, with financial markets ceasing to work. He went on to say that for savers, small businesses and homeowners, they have to be the rock of stability upon which British people can depend.
However the money is coming with strings attached, Leaving their positions at RBS and HBOS are the top executives. Also the remaining banks will have to revert back to the mortgage and small-business lending levels last seen in 2007, which is much higher than what is now being offered.
Alisair Darling is Britain's Treasury Secretary and he says that Britain alone will not be able to fix the global credit crisis but others seem to be willing to follow suit.
Darling went on to say that it is amazing that his counterparts, judging by discussions with them at the G7 and the IMF in Washington over the weekend and with the Brown and his colleagues in France yesterday, are now ready to do whatever it takes to strengthen the banking system and t help them deal with the uncertainly and turbulence.
For the first time in weeks Brown's comments at a news conference were tinged with a tone of optimism.
Brown spoke and said "I think you will find that in the rest of Europe over the next few days, exactly the same thing is going to happen and I think that you will find there are some discussions taking place in America around the Paulson plan about the use of the 700 billion that has been approved by [the] Senate and Congress for purposes that we are talking about this morning. So, this is perhaps the first government to do what I believe a large number of governments are going to do over the next few days and it is about restoring trust and confidence in the banking system which is absolutely essential for a successful banking system to flourish."
The European markets, at first reading, seemed to like the move because they traded firmly higher.
More about Britain, Bail, Greek banks
More news from
Latest News
Top News