The UK government has today announced that they are going to put a package in place to help the UK banking system. The total amount of help that the government are providing could rack up to a staggering £500 billion. The first part of the plan will see extra capital become available for 8 of the UK’s largest banks. In return the government will get preference shares in the banks. Prime Minister Gordon Brown has said that he hopes this backing will put the UK banking system in a stronger position.
However, as the news was announced the FTSE 100 in London fell by 4%. Some banks have seen their shares rise dramatically after the news whereas others have still continued to see a fall. Some of the key measures within the plan include:
Banks will have to increase their capital by £25bn and can borrow from the government to do this.
A further £25bn capital will be available but for an exchange of preference shares.
Those banks that want to participate will have to sign an FSA agreement which looks at executive pay and dividends.
Today’s measure will see £1,600 of each taxpayer going towards this scheme. Let me know your views on today’s actions.
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