TIMESONLINE: An emergency plan to pump billions of pounds of taxpayers’ cash into Britain’s banks emerged yesterday as the global financial crisis deepened.
In Germany Angela Merkel, the Chancellor, buried any remaining semblance of a unified European response by guaranteeing individuals’ deposits in an effort to avert a crisis of confidence in the nation’s banks.
Mrs Merkel, who with Gordon Brown led calls on European Union members to resist unilateral action on Saturday, guaranteed private savings to help to prevent the collapse of a German bank yesterday.
Early today Denmark also guaranteed all bank deposits as part of a deal with banks to set up a DRK 35 billion (£3.6 billion) liquidation fund.
The latest moves put further pressure on Mr Brown to follow suit after the Irish Republic and Greece offered similar assurances last week. The Treasury insisted that there was no change in the British scheme, which underwrites deposits up to £50,000.
However, Alistair Darling hinted yesterday that the Government could use public funds to take stakes in many if not all of Britain’s banks to help to restore the system. The Chancellor, who will make a Commons statement on the banking crisis today, said that the Treasury would do “whatever it takes” to help out banks in the short and medium term.
Although Treasury officials insisted that Mr Darling’s statement would not contain any specific proposals, they confirmed that contingency measures were under discussion. “I want to make it clear that we will do whatever it takes not only to stabilise the system but to help going forward, and that means perhaps some pretty big steps that we wouldn’t take in ordinary times,” Mr Darling said.
The German deposit guarantee came as financiers and politicians secured a last-ditch €50 billion rescue of Hypo Real Estate, one of the country’s largest lenders. German Savings Pledge Raises Stakes for Gordon Brown >>> Francis Elliott and Christine Seib | October 6, 2008
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