Sponsored Link:

U.K. Unveils Its Own Banking Bailout Package

By Jennifer Yousfi
Managing Editor
Money Morning

The U.K. government yesterday (Wednesday) announced its own banking bailout package with an $87 billion (50 billion pound) recapitalization plan for the ailing British financial sector.

“The global market has ceased to function,” British Prime Minister Gordon Brown said yesterday at a press conference in London. “The banking system must be sounder, and that is why we are putting the capital in.”

Under the plan, the U.K. Treasury will provide $43.5 billion (25 billion pounds) to recapitalize banks and boost their Tier 1 capital ratio. A bank’s Tier 1 capital ratio is a key indicator of the firm’s financial strength. An additional $43.5 billion (25 billion pounds) will be available if needed.

In addition, the Bank of England, the nation’s central bank, will increase the amount of funds available for short-term lending to $346 billion (200 billion pounds). The plan further guarantees an additional $432 billion (250 billion pounds) in loans.

Sign up below…
and we’ll send you a new investment report for free:

“The Three Best Investments in Asia.”

“The Bank of England will take all actions necessary to ensure that the banking system has access to sufficient liquidity,” the central bank said in a statement, The Financial Times reported. “In its provision of short-term liquidity the Bank will extend and widen its facilities in whatever way is necessary to ensure the stability of the system.”

The Bank of England also cut its benchmark lending rate a half-point bringing it to 4.5%. [Please click here for a related story on the coordinated global central bank rate cuts in today’s issue of
Money Morning.]

The following banks plan to take advantage of the government assistance:

Other U.K. banks and building societies are invited to apply for the program as well, The FT reported.

Britain’s blue-chip FTSE 100 Index hit a four-year closing low as it dropped 5.2% despite the government’s bailout package and the rate cut.

“These measures will not, of course, prevent the recession which is already underway. The aim is to reduce the risk that recession turns into depression,” Citigroup Inc. (C) economist Michael Saunders told MarketWatch.

Saunders cautioned that additional government measures could be needed to stabilize the British economy, including further capital infusions.

“We are probably not even half way through the decline in U.K. house prices. We are not even close to half way through the U.K. recession,” Saunders said. “Much of the economic pain still lies ahead.”

News and Related Story Links:

More on this topic (What's this?)
Frontrunning: June 24 (Zero Hedge, 6/24/09)
Some Quotes From Bank Of England's Mervyn King And Paul Fisher (Zero Hedge, 6/24/09)
David Einhorn: Bailout Bubble Redux (GreenLightAdvisor Views, 6/19/09)
MUST READ: A TWO PART CREDIT CRISIS (THE PRAGMATIC CAPITALIST, 6/9/09)
Read more on Investing in England, Banking, 2008 Financial Crisis at Wikinvest
October 9th, 2008

Peter Schiff: Why this Money Should Replace the U.S. Dollar

There’s a new universal currency, backed by solid gold. You can use it to make online purchases anywhere in the world. Converting some money to the new currency takes just 5 minutes. You can start with as little as $10… or as much as $10 million.

According to CNBC star analyst and Euro Pacific Capital President Peter Schiff, this money could double the value of your savings – automatically – in just 6-9 months.

For Schiff’s full analysis and recommendations, please go here.




This entry was posted on Thursday, October 9th, 2008 at 11:00 am and is filed under Top News. You can follow any responses to this entry through the RSS 2.0 feed. Due to the amount of comments we receive Money Morning will not be able to respond to all questions. If you have not already registered to leave a comment, once doing so you will receive Money Morning's Daily Email.

There Are 6 Responses So Far. »

  1. Pingback by topwebbusinesses » Blog Archive » UK Unveils Its Own Banking Bailout Package on 9 October 2008:

    [...] Original admin [...]

  2. Pingback by Italy Shores Up Banking Sector as Recession Looms on 9 October 2008:

    [...] Money Morning: U.K. Unveils Its Own Banking Bailout Package [...]

  3. Pingback by United Kingdom Leads European Nations in Coordinated Effort to Cut Off the Credit Crisis on 14 October 2008:

    [...] British government, which last week unveiled its own $87 billion bailout plan, spent $64 billion (37 billion pounds) for controlling stakes in three U.K. banks: The Royal Bank [...]

  4. Pingback by United Kingdom Leads European Nations in Coordinated Effort to Cut Off the Credit Crisis | Jutia Group on 14 October 2008:

    [...] British government, which last week unveiled its own $87 billion bailout plan, spent $64 billion (37 billion pounds) for controlling stakes in three U.K. banks: The Royal Bank [...]

  5. Pingback by Bank of England’s Deflation Defense: More Cut Rates on 12 November 2008:

    [...] early October, the government announced an $87 billion (50 billion pound) recapitalization plan to repair bank balance sheets and restore [...]

  6. Pingback by Jutia Group - Market Jitters & Political Critters on 13 November 2008:

    [...] early October, the government announced an $87 billion (50 billion pound) recapitalization plan to repair bank balance sheets and restore [...]

Post a Response