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| Rescue plan for UK banks unveiled | Rescue plan for UK banks unveiled |
| (10 minutes later) | |
| The UK government has announced details of a rescue package for the banking system worth at least £50bn. | The UK government has announced details of a rescue package for the banking system worth at least £50bn. |
| It will initially make the extra capital available to eight of the UK's largest banks and building societies. | |
| In return for the funding, the government will receive preference shares in those institutions. | In return for the funding, the government will receive preference shares in those institutions. |
| The money will be used to prop up the banking system that has seen share prices plunging in recent weeks as banks have struggled to access funding. | |
| As part of the package, a further £200bn will be made available by the Bank of England for short-term borrowing to provide liquidity to banks and building societies. | |
| Taking taxpayers' money will not be a licence to trade as normal Robert Peston, BBC business editor Read Robert Peston's blog | Taking taxpayers' money will not be a licence to trade as normal Robert Peston, BBC business editor Read Robert Peston's blog |
| The banks that have confirmed they will take part in the scheme are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered. | The banks that have confirmed they will take part in the scheme are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered. |
| The Treasury said that other banks would be able to apply for inclusion in the plan. | The Treasury said that other banks would be able to apply for inclusion in the plan. |
| Preference shares pay a fixed rate of interest instead of a dividend, which has to be paid before other shareholders receive anything, but they do not carry voting rights. | |
| 'Stop the panic' | |
| BBC business editor Robert Peston said there would be strings attached for banks that take the government money. | BBC business editor Robert Peston said there would be strings attached for banks that take the government money. |
| These will include restrictions on executive pay and dividends for other shareholders. | These will include restrictions on executive pay and dividends for other shareholders. |
| "Taking taxpayers' money will not be a licence to trade as normal," he said. | "Taking taxpayers' money will not be a licence to trade as normal," he said. |
| It is hoped that the deal will get the money markets going again and assure the future of the banking system. | |
| "They've got additional capital now if they want it, they've got an unlimited source of liquidity," said Terry Smith, chief executive of the money brokers, Tullett Prebon. | |
| "That certainly should stop the panic in terms of people wondering whether or not the banks are safe." |