(AFP) – Oct 13, 2008
LONDON (AFP) — Britain's government on Monday said it planned to invest up to 37 billion pounds (47 billion euros, 64 billion dollars) in ailing British banks Royal Bank of Scotland, HBOS and Lloyds TSB.
"With continuing exceptional instability in the global financial markets, the government is today taking decisive action ... to make commercial investments in UK banks," the Treasury said in a statement.
Royal Bank of Scotland said it intended to raise 20 billion pounds with the help of the government, adding that its chief executive Fred Goodwin would step down as RBS looks to recover from the credit crunch .
The Scottish bank said it intended to raise 15 billion pounds (18.9 billion euros, 25.8 billion dollars) from investors, an amount that would be underwritten by the government.
Taxpayers' money would meanwhile be used to buy five billion pounds worth of shares directly from RBS, the bank said in a statement.
Barclays bank said it intended to raise more than 6.5 billion pounds only from investors, turning down an offer of government help.
"Given the strength of Barclays' well-diversified business and the existing capital base, the board expects that the additional capital will be raised from investors without calling on the government funding which has been offered," Barclays said in its own statement.
The government's announcement was the first implementation of a rescue package for banks announced last week, in which it made available 50 billion pounds (64 billion euros, 87 billion dollars) to inject cash into financial institutions in return for shares.
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