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Brown holding bank crisis talks Government to unveil bank rescue
(about 1 hour later)
Prime Minister Gordon Brown is holding talks with Bank of England Governor Mervyn King on proposals to stabilise the banking system. The UK government is poised to announce details of a comprehensive rescue package for the banking system, the BBC's business editor has learned.
Chancellor Alistair Darling and the chairman of the Financial Services Authority, Lord Turner, are also taking part in the discussion. It will include a proposal to inject capital into banks and to provide a standby facility to ensure UK banks have enough cash.
Downing Street denied it was an "emergency meeting", adding that it would focus on "ongoing action". It is the government's attempt to stabilise the country's banking system.
Treasury sources said a statement was "likely" but would not be "definitive". It comes after a day of steep falls in UK banking stocks and a high-level Downing Street meeting.
Share falls
US President George Bush called Mr Brown earlier to discuss the global response to the financial crisis, Downing Street confirmed.
Banking shares fell in London amid news that bank bosses had met Mr Darling on Monday to discuss fundraising.
HBOS dropped 42%, Royal Bank of Scotland (RBS) fell 39%, Barclays shed 9% and Lloyds TSB was down 13%.
Icesave savers warnedIcesave: Your storiesQ&A: Deposit protectionRead Robert Peston's blog
Meanwhile, customers of the Icesave internet bank have been warned they will probably have to claim compensation for money held in their savings accounts.
UK authorities are preparing for the bank's parent in Iceland, Landsbanki, to be declared insolvent.
Icesave has 350,000 savers in the UK and Netherlands, with about £4.5bn of deposits.
A Downing Street spokesman declined to comment on whether there would be any House of Commons statement about Mr Brown's meeting.
Any announcements would be made in a "calm and orderly way", he said.
There was no mention of the talks at the lobby briefing for journalists earlier on Tuesday.
BBC political correspondent James Landale said: "Clearly things are moving. The question is 'how fast?'"
Monday's meeting was attended by Mr Darling, Mr King and Lord Turner, as well as representatives of RBS, Barclays and Lloyds TSB.
The Treasury is understood to have been formulating a plan that would allow the government to provide extra funding to the banks in exchange for stakes in them.
The government said it would not speculate about what policy options were being considered.