UK plans new bank bailout measures
Media reports say state insurance scheme will guarantee billions of pounds of bad assets.
Government officials and bank chiefs have spent the weekend in talks to try to reach a deal.
A key part of the bailout will be a huge state insurance scheme to guarantee billions of pounds of banks’ bad assets, according to local media reports.
The Sunday Times newspaper said that among the measures, up to 100bn pounds of new lending could be guaranteed.
It said the taxpayer’s stake in banks like HBOS and Royal Bank of Scotland could rise further.
Brown’s remarks
“We have recapitalised the banks, we have injected money into the economy, at the same time we know that the essential problem that has been holding back banks internationally is the resumption of lending,” Brown said.
“That’s what we’re going to be doing tomorrow and that is what the package is about.
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| Brown said ‘what we want to do now is to get the resumption of lending’ [AFP] |
“My first priority is hard-working families worried about whether they can get a mortgage, businesses who work hard every day. They need the banks to do the job they say they’re there for.
“What we want to do now is to get the resumption of lending and you will see tomorrow there are measures taken that will ensure that banks and non-bank institutions are able to resume lending or expand lending and in some cases to start lending.
“What we want to do is see businesses get the money that they need to be able to create jobs and secure investment for the future.
“What I want to see is people who are mortgage holders having access to mortgages at prices they can afford.”
International exposure
The bailout announcement came a day after Brown told British banks that they must own up to the extent of their bad assets.
He said on Saturday in London that British banks’ exposure to international losses was the largest problem they faced and called for an internationally agreed solution.
“The international community has got to modernise and change and reform and get to the roots of the problem that make us angry about the way that the system is operating,” he said.
Shares in Royal Bank of Scotland and Barclays plunged on Friday after US giant Citigroup announced a $8.29bn fourth-quarter loss and Bank of America got a $20bn state bailout.
And recession is likely to become official in Britain this week when data is expected to show that the economy contracted for a second straight quarter in the final three months of 2008.