Brown £Billion Bailout
October 13, 2008
The £37 billion bailout for RBS, Lloyds TSB and HBOS has been hailed as essential for the whole of the economy by Gordon Brown.
The markets have welcomed the news as the FTSE 100 opened five percent higher today. The RBS chief executive is to stand down as the bank is now worth less than the extra capital that was already raised by its shareholders.
Lloyds TSB are revising the terms of its takeover of HBOS and is raising £5.5 billion of new capital.
Barclays is to raise £6.5 billion to strengthen its balance sheet with help from its investors. The Barclays group has said that it will not be paying dividends for the end of the 2008 financial year, due in at £2 billion.
The £37 billion bailout will leave only HSBC (a foreign owned bank) as a fully independent bank on the high street.
The Government has already had to bail out two major UK mortgage lenders and controls Northern Rock and Bradford & Bingley.
The intervention raised hopes that the suffering markets may begin to fight back in the midst of a turbulent economy. I think like many others that this is unlikely!
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