The Chancellor yesterday morning announce his £500bn banks bailout plan which will see some of the banks part-nationalised. The plan consists of the following:
- At least £200bn for short-term lending to banks to replace funds they normally borrow through the inter-bank market.
- £25bn recapitalisation facility for Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered to boost their balance sheet. However, Abbey, HSBC and Standard Chartered have already declined the offer.
- £25bn top-up fund if the first capitalisation proves inadequate.
- £250bn government guarantee of bank bond issues - again to help shore up the banks’ strained balance sheets.
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