UK govt to hike stake in RBS to about 70 pc

The British government will increase its stake in Royal Bank of Scotland to about 70 per cent...

Written by Press Trust Of India | London | Published: January 19, 2009 11:28 pm

The British government will increase its stake in Royal Bank of Scotland to about 70 per cent as the treasury is likely to guarantee at least 100 billion pound of new lending,a media report says.

“The Treasury will tomorrow drastically revise the terms of last October’s bank bailout and say it will guarantee at least 100 billion pound of new lending,” the Sunday Times said. As per the new rescue plan,the government would offer guarantees on new consumer loans,outline plans to ringfence “toxic” assets on bank balance sheets and propose to refinance the preference shares that were used to rescue Royal Bank of Scotland and HBOS.

The daily further said as part of the deal,”the taxpayers stake in Royal Bank of Scotland could jump from 57.9 per cent to about 70 per cent”.

The newspaper said,”Britains bank bosses are on standby to be called to Downing Street today or tomorrow to hear details of the new rescue plan.” Quoting officials the report said,”the scale of the guarantees was difficult to determine at this stage as they would depend on demand from the lenders and the appetite for borrowing in an economy heading into deep recession.”

“Ministers have agreed to soften the terms of the 37 billion pound autumn recapitalisation of Royal Bank of Scotland,Lloyds TSB and HBOS,” the Sunday Times added.

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