British Prime Minister Gordon Brown has unveiled a second bail-out for the country’s troubled banks.As part of a package to try to kick-start the economy, he is offering guarantees for the bank’s debt and has created the equivalent of a 55 billion euro fund to boost cash flow. Brown said: “This not help for banks, but help for businesses and families, by providing the capital to ensure credit for businesses and families and to raise demand in the economy.” As well as guarantees on debt, banks will be able to insure themselves against losses on riskier assets. The UK central bank will be able to buy private sector assets. The failed bank Northern Rock will get more time to pay off its loans. Chancellor of the Exchequer Alistair Darling, said the recession would be much worse and there is a risk of economic collapse without this bank bail-out: “I’m determined to make sure that we control the risks that we’ve got , but also determined that if we do this – if we support banks – that they actually have to pass the benefit of that on – through lending – to the wider economy.” The latest plan will also see the government increase its holding in Royal Bank of Scotland to 70 percent, after RBS announced the biggest loss in British corporate history. Analysts said the latest moves are unlikely to produce immediate results and shares in the country’s biggest banks slumped further after the plan was outlined.
UK banks get another bail-out