A £37 billion rescue package for British banking was unveiled today, sparking an early rally on London’s leading share exchange.
The dramatic bailout for three of the UK’s biggest banks – branded “unprecedented but essential” by Prime Minister Gordon Brown – helped lift the FTSE 100 Index by more than five per cent to 4174 points.
The Government announced it will buy £15 billion of shares in Royal Bank of Scotland as well as pumping in an extra £5 billion of emergency aid.
Lloyds TSB will receive £5 billion of taxpayers’ cash in aid. HBOS will also receive aid worth £11.5 billion and the Government will buy a further £3 billion of shares in the stricken bank prior to a planned takeover by Lloyds TSB.
Barclays said it is not turning to the Government for emergency funding, unveiling instead plans to raise more than £6.5 billion from investors to help its balance sheet. The high street bank also said it will not pay a final dividend for 2008, saving the group £2 billion.
As part of the unprecedented deal, RBS’s under-fire boss Sir Fred Goodwin, who earned £4 million last year and asked investors for £12 billion to help shore up the group, is also to step down.
The Government revealed the bailout plan just hours after EU leaders signed up to Mr Brown’s blueprint for recovery.
The announcement, after an emergency summit of eurozone countries in Paris yesterday, was seen as a significant personal victory for the Prime Minister with the US also on board following crisis talks over the weekend.
Mr Brown said today: “In extraordinary times, with financial markets ceasing to work, the Government cannot just leave people on their own to be buffeted about.
“For savers, for small businesses, and for homeowners, we must in an uncertain and unstable world be the rock of stability on which the British people can depend.”
It is understood the Government will own around 40 per cent of the new combined HBOS and Lloyds TSB bank and around 60 per cent of RBS, although the final figure will depend on the take-up of shares.
By Business Editor Amy Bould
41 Comments
Why dont they just give the money to people on benefits and watch it get spent an immediately boost the economy? I haven’t got a degree in economics, but you dont need one. Its so simple!
thank goodness for a couple of professionals at the head of our goverment leading this country and the world if it wishes out of a global crisis. well done gordon and alistair
today remember the date 13.10 .08 a newspaper remarked was the day that capitalism failed. a handful of bankers, i think thats what they are called has probably caused up to 200,000 of their fellow workers and their families an uncertain financial future and will have caused a slump or recession leading to repossessions of homes, unemployment etc. i hope they are proud of their greed, self indulgance and a complete lack of concern for their fellow workers.
interesting that the US and the EU are following UK lead on this, so clearly gb and darling must know what they are doing here
i hope it goes badly for them, that will teach them, and it will speed up big green daves coronation
I cant believe that Gordon Brown is comparing himself to Churchill - the man is deluded (Brown, not Chrurchill)
As part of the deal, no bankers are allowed any profits - just watch the talent leave the UK! Do these politicians ever stop and think or are they too busy looking for the headline or baby to hold?
this is a very good investment, though house prices will drop another 20% this does NOT mean banks are worth 50% less at the moment, i am buying some extra shares (in addition to the ones GB and Darling shrewdly bought for us) and I look forward to in the recovery selling them for a massive profit, the other thing is that even if my home goes down 30% and I have negative equity, i am not going to default to the bank, i am going to ride the storm wait for a few years til the price goes back up again, sell up and pay the bank back in full, so what has the bank to worry about and what is all the panic and fuss about?
Rememeber the phrase ‘’safe as houses”, relax, put your feet up, the politians are on the case, it will all get sorted and its not the end of the world if a few bankers get made redundant and few big investors loose some cash
Perhaps someone can tell me what economic and financial acumen, knowledge, intelligence and skill is required to pour taxpayers money into failed banks and finance houses. What these pair of idiots have done at a stroke has made future investment into public services highly unlikely, tax rises almost inevitable and incurred debts so horrendously high it is going to put this country in hock for the next three score years and ten. This mess should have been sorted out by the Bank of England, without taxpayers picking up the tab but there again, having sold our gold reserves at rock bottom prices and borrowed to hell to fund the irresponsible spending over the past 11 years - we probably haven’t got a Bank of England with any cash left in the till.
The total obscenity is, that this method used by Brown and Darling, allows CEOs, who, having made an almighty mess of their banks etc, to retire with cash sums that defy one’s imagination. In effect, the money that the taxpayers are giving to bail out the banks, is being used to allow the guilty parties to retire to the sun and pastures anew away from the hassle of the banks etc that they have bust and the workers that they have thrown on the scrapheap. Then we have to read the idiocy of devon salopian praising these two, Brown and Darling who have opted for the easy way out at the taxpayers expence. Perhaps devon has a few thousand salted away in a failed bank or building society and Brown and Darling have given him taxpayers money in recompence. Sorry devon, if you have, you knew what you were doing when you put your money away, you should have lost it, not expected me and millions of others to give you a back-hander.
diddy david cameron will be 92 before he attends a tory coronation and it probably will not be his.
one wonders if tory boy was a ever a merchant
banker, looking at his blogs, there must be a good chance by the sound of them
I used to work in the city and would like to share someinteresting facts.
The Bank of England was establish in 1694 to provide a loan to the government in return for privileges. I think we were in financial dire straits fighting Johnny Foreigner. (nothing seems to have changed much there then!)
Mix the numbers up and in 1946 the Bank of England was the first company to be nationalised under Labour.
So why dont Labour privatise the Bank of England with a floatation to raise the money for its current nationalisation scheme?
This economics thing is so simple if you have had to balance a household buget. Trouble with Brown and Darling is they have never had to manage their own finances. They’ve never even had a paper round.
There’s alot to be said for electing the daughter of a grocer to run the country!
Maggie Klein, I don’t profess to be some economic/financial whizz kid but I don’t have to be to suggest to you that you are in need of some urgent and serious financial advice. If at present, you are prepared to buy shares in bailed out financial houses rather than reduce your mortgage debt which you blithely accept will put you in negative equity in the future if things continue then you need your logic looking into.
The essential, prime requisite in these present times is to reduce debts. If you have money to buy shares, you also have money to reduce your debts, be they mortgage or whatever. Shares can go down if you put money into them but so can your mortgage if you put more money into that - commonsense indicates which is correct at this specific time. If you think that Brown and Darling have bought you a golden goose, let’s wait and see shall we. I notice that no dividends will be paid this year on the banks etc., bailed out. Your reasoning is flying in the face of almost every financier of worth and credibility.
Lucy Woodridge, you defend the bankers in #6.
Are there any powerful people in this country who you DO feel ought to be held accountable for what has happened in the finance sector?
Huw: You really are a little stirrer! I haven’t defended bankers just pointed out that the best of the UK banking talent will go abroad where they can earn mega bonuses at a time when we need them most.
And no dividends! Well who’s going to want to invest in that?
I would like to see Brown and Darling on Dragon’s Den asking for £37b to invest in a business that will not reward talent and give a return to investors. “I’m out” will be the unanimous response, probably with “of the country as soon as possible” added as well.
Lucy W. It was electing the daughter of a green grocer that led to all of our current economic ills in the first place!
It was she who encouraged a the ’spiv’ culture in the stock exchange and the banking sector. It was her government that privatised all of our power utilities. It was her government and philosophy that encouraged the de-mutualistaion of solid, dependable building societies, and replaced them with dodgy banks.
It was her government that created a whole generation who were without work and whose offspring have no work ethic having never had the example of seeing their parents working. It was she who made wholesale attacks on workers’ rights, leaving them powerless to defend themselves against multinational companies exporting their jobs, or exploiting them with lower and lower pay.
Brown and Blair were culpable too, in that instead of following proper Old Labour policies, they stuck with Old Tory greed in the hope that it would see us through - it didn’t!
At least now the Prime Minister is taking a lead in making some prudent finacial decisions - to the extent that he is being followed by the rest of Europe and even the uber-Capitalist US.
In the long-term, the banks will return to profit, and to private-sector control, but here’s a suggestion: If we are indeed all paying £600 per head to fund the current part-nationalisation, then at the end of this, when the banks are in profit, but before they have been returned to the private sector, we take out a £600 guaranteed government bond for each and every person by way of payback, in a similar way to the money issued at birth to children these days.
In many cases, this would be cashed in immediately, but a good proportion would remain invested in government bonds, which could only be good for the public purse, and ultimately for the investors.
Lucy W - In reply to your comment 6 - “just watch the talent leave the UK!”
If thhose bankers who are the people who got us into this mess are the talent of the banking industry I say by all means let them leave the country.
another labour failure, im off to st lucia, better tax regime too
i do not think we can call tory boy a labour failure
A shrewd investment by the government thank goodness for gordon
Still blaming the previous tory spell!!!
Beyond belief, this Labour motely crew have once again re mortgaged the country beyond the hilt!
They have wasted Billions upon billions and continue to do so, and try to take credit for the mess they should have spotted when the Clown was running the treasury. He was busy selling our gold reserves when prices were at an all time low.
Bliar fool you, this Clown is delusional.
God help us!!
I can only speak as I find, I did alright as a result of Maggie’s policies, but she preached prudence, telling us we couldn’t give ourselves pay increases without increased productivity. I think people are misled by Left-wing characterturing of Tories.
yes maggie was good at somethings, but these were heavily outweighed by the loss of manufacturing jobs, her treatment of the miners and steel workers, the poll tax, deregulation of the bus companies. selling off the family silver-gas-bt-electricity-tsb amongst many other things
the situation with the banks is that it is not nationalisation but our government on our behalf has taken a controlling interest in them when the shares were rock bottom, and the goverment will sell them on when they the banks have learned what banking is about, and at a vast profit for you and me. rather this than johnny foreigner taking over our finance industry. well done gordon and alistair, britain is leading the world again,even little old usa is following our lead today and stock markets around the world. gordon brown putting great back into britain
Shortly after taking office, this Labourite gang brought into being the FSA, the intention being to regulate the Economic /Finance Sector. They did precisely nothing. A few years later, Bliar made one of the most profound comments that is wholly relevant to the present disaster, I quote, words to the effect, “our economy should have as one of it’s basic tenets, consumer spending and consumer access to money, to much regulation will strangle our economy and we do not intend to apply it”. The FSA were, from then on, to all intents and purposes was defunct and with that philosophy from Bliar and a non functioning FSA, the seeds of this mess were sown. This Government have been in power for 11 years, they have let rip, wild spending based on borrowing, encouraged massive consumer debts, have failed to rein in irresponsible banks who have loaned vast amounts to those who cannot repay, have done nothing about mortgages at over 100% indeed they saw this as a way of first timers getting on the peoperty ladder. They have known about and done nothing to stop vast bonuses which encouraged idiotic policies by banks and finance houses. They have failed to save money for economic downturns and, in short, between the Government, the banks and the FSA which they set up to regulate the whole financial policy of those in the banking sector each one of these is directly responsible. The Government however should accept the “last resort” blame.
Then we get the usual left wing, bordering on Marxist rampage of Peter who lives in the past, lacks a current workers fight to fight so has to harp back to Maggie, the greatest Prime Minister next to Churchill, this country has had. So now we know, out current problems are down to Maggie, now there’s intelligence, who could have thought of that. The current yob on the street corner, blame Maggie, the chap out of work, blame Maggie, the exporting of jobs, blame Maggie. Well Peter, did you see and hear the arch Labourite Robinson on TV last night, he admitted that this Government set more store by banking and finance in the city and it’s offshoots than manufacturing and industry, he accepted this as a mistake.
Peter, why don’t you wrap yourself in the hammer and sickle and go to Russia and start your own little revolution there because the old left wing blurbs are wearing a little thin. She left office long ago, Labour have been in power for 11 years just in case you didn’t know. Let’s have more Grocers daughters, she took this country to the heights only for New Labour to knock it down again.
Come on Devon. I remember the miners strike. It was a treat when I was a kid to stay up and watch the 9 O’clock News and see who won the days foray. I felt sorry for the miners because whippets and cloth caps were no match for German Shepherds and riot shields. And the police wouldn’t share the horses either. However the miners would probably done a bit better if those pit ponies could see in daylight.
And who actually paid poll tax?
Stuart, if, before heading off your childish rant, you had actually taken the trouble to read my previous post, you would have noticed that I acknowledged the culpability of ‘New’ Labour in the current mess, in that they continued the policies of reliance on the service and particularly the finance sector to support the UK economy.
You really need to read a little more about Russia and Marxism before labelling people - you clearly lack understanding of 20th century political history.
Are you then denying that Thatcher and the Tories privatised all of our energy utilities? That she opened up the UK jobs market to the whim and short-termism of almost completely unresticted capitalism?
I think history will not favour Thatcher. It will see that she made fundamentally damaging changes to this country, which put us firmly in the pocket of global capitalism, and ironically did more to undermine our ability to determine our own future than the great bogeyman of the EU!
There may have been those, such as Lucy W, who benefitted from her lack of compassion and lack of egalitarianism, but the vast majority didn’t.
I laugh at people who blame this all on Maggie Thatcher.
How many poor families got the chance to own a council house and buy it for v cheap amount of money.
Millions.
These people now own houses worth 20x what they paid for them in the 80’s and 90’s.
shrewd spend to save investment, well done Darling
The reasons for our current woes lie with the weak inept regulation of financial markets, put in place by the then weak, inept chancellor, now running a weak inept government.
The FSA should resign enblock, another Labour quango!
Peter: I only said I did “all right” under Maggie. I lived under the following Prime Ministers.
2007 Gordon Brown Labour
1997 Tony Blair Labour
1990 John Major Conservative
1979 Margaret Thatcher Conservative
1976 James Callaghan Labour
1974 Harold Wilson Labour
1970 Edward Heath Conservative
1964 Harold Wilson Labour
And do you know under which one’s I’ve had to work hard to get to where I am today?
Every bl**dy one of them!!!
So at a rough guess I would say your over 40 Lucy W?
But I bet you only look in your mid 20’s!!
Y Mab,
And how many families as a result found that there was no longer decent council-rented accommodation available to them as a result of the selling off of so much council house stock?
These people were then forced into buying property which they could ill-afford, lost their jobs as a result of Thatcher’s attacks on manufacturing and other industries, and ended up homeless.
Yes, there were winners under Thatcher, but there were many, many more losers.
Y Mab: Guess again you cheeky git!
Peter: The people who brought their council houses were never going to leave them and buy a property at market value and make way for the “needy”.
They were just burdens on the state and the scheme at least got rid of that burden and raised some revenue.
I do not despise these people, I would have done just the same if I had the chance. But Thatcher helped me by allowing Banks to give mortgages and so give me the opourtunity to own my own home.
hahhahahah LABOUR ARE LOOSERS, brown is a clown, darling is a starling and we’re going to win
I laugh in the face of those who insult the thatcher legacy when their socialist ways have led to the exact same results; inflation and unemployment
whichever way you try to spin in mandelson you have led to boom bust
Peter - Your wrong there is in fact a lot of empty council housing with no one living in them. So selling off the council houses did not result in a lack of council accomodation
Peter, I wouldn’t argue with you. You have an obsessive fixation over the evil Maggie Thatcher and clearly you speak from an extreme (at the least) socialist bias which, before and when she was in Downing Street, was bent on destroying this countries freedoms and democratic basis. Maggie Thatcher rightly set out to destroy this threat to our way of life, which luckily for us she did. We have her to thank for standing up to the union “bully boys” like the “Telford two”, Red Robbo, Scargill, McGahey and the rest of the thugs from the Socialist Workers Party, the Communists and the extreme left and militant unions who set out on Industrial confrontation to bring about the downfall of democracy and give rise to a workers revolution and a Marxist state. As for knowledge of history, I know it, I don’t have to “Google” it. I have yet to see one blog from you where the name of Maggie Thatcher does not come into it in some derogatory sense. She was the best thing that this country had in one of it’s darkest hours and if this lot now continue with things the way they are, the unions are going to rise to the fore and rule the country again, look at the clown in the Unite union and you will see what I mean. Hardly able to put two words together but he leads a massive union, supports New Labour and has decidely firm socialist views which he believes he has the right to inflict on the Labour Party and ultimately ourselves. Each time I see silly comments from the extreme left wing, I will respond with the truth. Maggie saved this country.
moaning poor people that’s all you get on here, i dont care, my moneys in gold
Why even suggest giving the money to the people on benefits to spend? How about giving it to the wealthiest people who have paid the most tax over the years? Give them a handout not the slackers!
tory boy has said something sensible, his money is in gold. excellent, a small amount of my money is in gold the rest in dinky toys, good old ebay
yes maggie can be commended for standing up to argentina but the falklands war was a close run expensive thing, and it was her foreign secretary who took his eye off the falklands and her defence sec. who cut the defence forces.so the score for maggie 28% good 72% bad. he successor was no better.
Torwy bwoy does seem to represent in his trolling the worst effects of greed on humanity. Either he’s trolling for an argument, insulting anyone for a laugh or is as stupid as he sounds. I don’t think he’s got any money at all, let alone Gold. Every govt has problems, every govt picks up where the last one left off. Get a life troll-boy (or girl possibly).
Stuart,
I’m not obsessed with Margaret Thatcher, but I think her tenure was extremely significant in the light of our current malaise and its historical origins. She will be regarded by historians no doubt as a significant leader, but as the ‘Saviour of this country?’- I think not - many good people living in this country today still feel that their lives were blighted by her.
As for your earlier praise of Churchill as a Prime Minister, whilst he was incomparable as a wartime leader, his peacetime spells as Premier were uninspiring at best.
Turning to Scargill et al, I was never a fan - despite your attempts to label me, my politics simply aren’t extreme.
One thing you can say about Arthur though, he predicted that Thatcher was out to destroy the mining industry, despite her denials. History proved him right.
Oh, and I think you’ll find it was ‘The Shrewsbury Two’ (Des Warren and Ricky Tomlinson). I know it galls you to associate negative things with Shrewsbury and you would rather pin these things on Telford, but the fact is they were named after the County town.
Marco, I think you’ll find that proportionately speaking the poor pay the highest proportion of their income as tax, whilst the very wealthy pay the least. The rich are getting enough breaks as it is!
“I think not - many good people living in this country today still feel that their lives were blighted by her.”
Peter,
The lives of myself, my friends, my family and my associates and effectively everyone around me were not adversely affected in any way by Maggie Thatcher. Certainly we were not blighted.
The ones adversely affected, and I think particularly of the miners, were those who through industrial brute force and muscle, earned astronomic wages and continued to demand more. There were many more groups such as the printers, the highest paid in the country who virtually displaced managers and ran the show themselves, hiring/firing etc, and the car workers who counted two or three days between strikes as good going.
These workers, were politicised through and through, the miners, in particular were fed on a diet of workers revolution, the bringing down of capitalism and Union leaders who saw themselves as revolutionary political leaders rather than being there for purely “union” purposes. Strikes were not in furtherance of legitimate claims, they were used as a political sledgehammer to bring down a democratic government. Workers had free choices, most of those at the forefront of industrial unrest and social upheaval were the highest paid workers in the country with the best working conditions and those that felt the affects of their continual industrial action were invariably those in other jobs who could ill afford it. They chose to follow rabble rousers, megalomaniacs, thugs and anti - democratic idiots. Job security was put in jeopardy in every strike and still they continued, their kids, their homes, their wives their families and not least their country was forgotten as they went on strikes and demonstrations and all that they forgot met with the inevitable result. The Government in the form of Maggie gave them enough rope and the miners hanged themselves and they were taught a lesson which they richly deserved. I had and have no sympathy for anyone of them that got mixed up in that lot, they could have opted out or changed things - they didn’t. Then, afterwards, they cried foul and pleaded paupersism with suffering kids and homeless wives etc. Pity they didn’t see what was coming when they took on the democratic Government and Police. They got what was long overdue, including bruised heads and their leaders sank into oblivion as abject failures.
The decent people of this country could breathe again in the knowledge that we had a Government who intended to govern and not hand us over to the idiots who had taken control of the unions.
When you mention Telford, I worked there for 3 years, I hated every second of it. Those that belonged to the old established communities were the salt of the earth, decent in every single respect and I wouldn’t be critical of any single thing about them. Those in the “new town” and I use that word advisedly and the relative newcomers (say since the 60s) are something else.
The only reason I called the two thugs, the Telford Two is because that is where they caused mayhem and destruction, the town of Shrewsbury had the unfortunate task of seeing the town given over to the same rabble rousers, industrial trouble makers and demonstrators during the days of their trial at the Column Crown Court where rightly they were sent to prison as should many more.
Peter, I don’t see how that’s possible! How can someone who pays a lower rate of tax (or who pays no income tax at all) pay proportionately more tax than someone in a higher tax band? (I am talking about just the average working joe’s who get paid a salary and get tax taken off it. )