Second banking bailout announced
Monday 19th January 2009, 8:18AM GMT.
The government has announced a second bailout of Britain’s major banks, four months after it injected £37 billion into the sector.
The new plans, to be confirmed by Gordon Brown and Alistair Darling at Downing St at 09:00 GMT, are aimed at freeing up blocked credit and encouraging the banks to start lending again.
Further protection for banks against toxic assets in the form of a new insurance scheme is also part of the bailout, as is a £50 billion purchase of the worst debt.
Mr Brown and Mr Darling are also expected to confirm an increase in the government’s stake in Royal Bank of Scotland as £5 billion worth of preferred shares are converted to ordinary stock.
And Northern Rock, nationalised last year, will be repaying a government loan at a slower rate.
The Treasury insisted the impact of the bailout on the public purse would be “mostly temporary”.
“Investments will be held for no longer than is necessary to ensure stability and protect taxpayer interests; liabilities will be backed by assets; and fees will be charged for relevant schemes,” a statement said.
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