THE TELEGRAPH: The Government has begun nationalising the British banking industry, pumping £37 billion of taxpayers' money into HBOS, Royal Bank of Scotland and Lloyds TSB.
RBS will receive £20 billion of capital from the Government - leaving taxpayers holding a 63 per cent stake in the company. Its chief executive, Sir Fred Goodwin, is to resign.
A further £17 billion is to be injected into the merged HBOS-Lloyds TSB, meaning 41 per cent of the new "superbank" will effectively be owned by the public.
Before the merger, taxpayers will own around 58 per cent of HBOS after the Treasury bought shares worth £8.5 billion and preference shares worth £3 billion and 30 per cent of Lloyds TSB after buying shares worth £4.5 billion and preference shares worth £1bn.
Gordon Brown said the "unprecedented but essential" move was "something that matters for every family and business in Britain."
"We must, in an uncertain and unstable world, be the rock of stability on which the British people can depend," the Prime Minister said.
"To let the chips fall where they may would be the height of irresponsibility," he told a Downing Street news conference.
"The Government can not just leave people on their own to be buffetted about."
Describing the move as a reaction to "exceptional, extraordinary" times, the Chancellor, Alistair Darling, admitted that Government borrowing would have to soar to fund the deal. However he insisted that taxpayers would get their money back.
He said that the intervention was a crucial step in the international fight-back against the financial crisis, and that other governments would now follow Britain's example.
"We are living in extraordinarily turbulent times," he told BBC Radio 4.
"This is a model that other countries are going to adopt, because this is a truly global problem."
Mr Brown confirmed that as part of the deal, the Government will appoint directors to the banks' boards of directors, with three being sent to RBS and two to Lloyds TSB-HBOS. No bank executives will receive bonuses this year, he said. Financial Crisis: Banks Nationalised by Government >>> By Andrew Porter, James Kirkup, Gordon Rayner and Jon Swaine | October 13, 2008
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