The British Government has announced a bailout package of some 47 billion euros to boost the capital of three of the country’s leading banks.
The state is to take equity shares in the Royal Bank of Scotland, Lloyds TSB and HBOS.
British Prime Minister Gordon Brown said it is a necessary move, “ The action we are taking is unprecedented, but essential for all of us, it is not just important to economists and financial experts, it is something that matters for every family and business in Britain.
In extraordinary times, with financial markets ceaseing to work the government cannot just leave people on their own to be buffeted about, for savers, small business and homeowners we must, in an uncertain and unstable world, be the rock of stability on which British people can depend.”
The UK Treasury is selling the bailout as an investment with conditions attached, including a commitment by the banks to lend to homeowners and small business at 2007 levels, limits on executive pay, and government input on new board appointments.
The cash injection means the British government could become the largest shareholder, and even majority investor, in Royal Bank of Scotland, HBOS and Lloyds TSB.