Britain announces $87 bn bailout plan for banks

October 8th, 2008 - 2:14 pm ICT by IANS  

Gordon BrownLondon, Oct 8 (DPA) The British government Wednesday announced a major rescue package for leading banks of 50 billion pounds ($87 billion) to stabilize the banking system, according to a statement to the London Stock Exchange.Chancellor of the Exchequer Alistair Darling, detailing the plan in a written statement to the London stock market Wednesday, has said it was aimed at placing the banking industry on a long term “sound footing.”

A government spokesman said the plan was aimed at securing the “substantial restructuring of banking.”

It is hoped that the scheme, using taxpayers’ money in what amounts to the part-nationalization of leading banks, will restore confidence, revive lending and stimulate the flagging economy.

The move, sealed at a top-level meeting called by Prime Minister Gordon Brown at Downing Street late Tuesday, came after two days of turbulent sessions on the stock exchange, which saw leading bank shares fall sharply.

Pressure had grown on the government to take decisive action to prevent a run on banks.

Government officials warned Wednesday not to judge the impact of the plan by the immediate reaction on the markets, but to appreciate its long-term effect.

Details of the scheme will be laid out to parliament by Darling later Wednesday.

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