British government to become main shareholder in two banks

October 13th, 2008 - 12:20 am ICT by IANS  

London, Oct 12 (DPA) With the implementation of its 500 billion pound ($850 billion) rescue package, the British government will on Monday become the biggest shareholder in two of the country’s largest banks, a report said Sunday.The government was due to launch a rescue plan Monday for Britain’s two largest banks, which need a collective 35 billion-pound injection.

The Royal Bank of Scotland (RBS) needs 15 billion pounds in exchange for preferential shares, while the Halifax Bank of Scotland (HBOS) needs 10 billion pounds in additional capital, the Sunday Times newspaper said.

The government could end up with 70 percent ownership of HBOS and 50 percent of RBS, according to the report.

It was not clear, however, what influence the government would have on the boards. Finance Minister Alistair Darling denied at the presentation of the rescue package that the state wanted to take over the banks.

The rescue package involves a government guarantee for loan transactions between banks and government acquisitions of bank shares. The government has made available 50 billion pounds in taxpayers’ money.

The British government announced the rescue package for banks under a bail-out programme that also includes an increase of 200 billion pounds of Bank of England liquidity and 250 billion pounds in credit guarantees to cover inter-bank lending.

The Sunday Times also reported that Lloyds TSB wants 7 billion pounds in capital and Barclays, 3 billion.

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