Darling Outlines His Cunning Plan
Alistair Darling has announced details of his cunning plan to save the British banking system.
The government are going to make £50 billion of extra capital available to eight of the UK's largest banks and building societies.
In return the government will get preferential shares in each of them, namely Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered.
As part of the package, a further £200bn will be made available by the Bank of England for short-term borrowing to provide liquidity to banks and building societies.
Exactly what happens if you're not one of these eight and need liquidity (and who doesn't?) seems a bit unclear. The Treasury has said that other banks would be able to "apply for inclusion" into the plan.
What criteria they must fulfil to get to play with the big boys, or whether they must borrow at inflated rates from the big boys themselves also seems unclear.
It seems that there will be strings attached for those wanting/needing to participate to prevent them from simply taking the cash & carrying on as before.
HBOS shares are up 25%, RBOS 11% and Lloyds TSB 4.66% in early trade but the FTSE100 is down overall, 128.92 points lower, or 2.8% at 4476.30 as at 8.20am BST.
The pound is a little firmer on the news, rising to $1.7525 from $1.7455 yesterday.
The government are going to make £50 billion of extra capital available to eight of the UK's largest banks and building societies.
In return the government will get preferential shares in each of them, namely Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered.
As part of the package, a further £200bn will be made available by the Bank of England for short-term borrowing to provide liquidity to banks and building societies.
Exactly what happens if you're not one of these eight and need liquidity (and who doesn't?) seems a bit unclear. The Treasury has said that other banks would be able to "apply for inclusion" into the plan.
What criteria they must fulfil to get to play with the big boys, or whether they must borrow at inflated rates from the big boys themselves also seems unclear.
It seems that there will be strings attached for those wanting/needing to participate to prevent them from simply taking the cash & carrying on as before.
HBOS shares are up 25%, RBOS 11% and Lloyds TSB 4.66% in early trade but the FTSE100 is down overall, 128.92 points lower, or 2.8% at 4476.30 as at 8.20am BST.
The pound is a little firmer on the news, rising to $1.7525 from $1.7455 yesterday.
