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| Version 1 | Version 2 |
|---|---|
| Darling in US for finance meeting | Darling in US for finance meeting |
| (about 7 hours later) | |
| Alistair Darling is flying to the US to meet with fellow finance ministers to discuss ways in which countries can continue to tackle the banking crisis. | |
| The Chancellor is due to attend a meeting of the G7 group of leading nations on Friday, and an International Monetary Fund gathering on Saturday. | |
| It comes after six of the main central banks cut interest rates by half a percentage point on Wednesday. | |
| The UK government also pledged a further £400bn for British banks. | |
| Extra funds | Extra funds |
| Under the UK government's £400bn move, banks will have to increase their capital by at least £25bn and can borrow from the government to do so. | Under the UK government's £400bn move, banks will have to increase their capital by at least £25bn and can borrow from the government to do so. |
| The markets are still getting to grips with the detail Keith Bowman, Hargreaves Lansdown Stockbrokers | The markets are still getting to grips with the detail Keith Bowman, Hargreaves Lansdown Stockbrokers |
| An additional £25bn in extra capital will be available in exchange for the government receiving preference shares. | An additional £25bn in extra capital will be available in exchange for the government receiving preference shares. |
| A further £100bn will be available in short-term loans from the Bank of England, on top of an existing loan facility worth £100bn. | A further £100bn will be available in short-term loans from the Bank of England, on top of an existing loan facility worth £100bn. |
| And up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend to each other. | And up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend to each other. |
| To participate in the scheme banks will have to sign up to a Financial Services Authority agreement on executive pay and dividends. | To participate in the scheme banks will have to sign up to a Financial Services Authority agreement on executive pay and dividends. |
| 'Worries' | 'Worries' |
| Despite the government's announcement of an extra £400bn for the banking sector, and the co-ordinated interest rate cuts by the six central banks, analysts have warned that the economic turmoil could be far from over. | Despite the government's announcement of an extra £400bn for the banking sector, and the co-ordinated interest rate cuts by the six central banks, analysts have warned that the economic turmoil could be far from over. |
| "The markets are still getting to grips with the detail," said Keith Bowman, equity analyst Hargreaves Lansdown Stockbrokers. | "The markets are still getting to grips with the detail," said Keith Bowman, equity analyst Hargreaves Lansdown Stockbrokers. |
| Nic Clarke, banking analyst at Charles Stanley Stockbrokers, said the problem was that there were "two big pictures at work here". | Nic Clarke, banking analyst at Charles Stanley Stockbrokers, said the problem was that there were "two big pictures at work here". |
| "Worries about capital, which these plans will help, and worries about the global economy going into a deep recession, which these plans cannot solve," he said. | "Worries about capital, which these plans will help, and worries about the global economy going into a deep recession, which these plans cannot solve," he said. |
| The cut in UK interest rates to 4.5% from 5% prompted six mortgage lenders to immediately reduce their rates. | |
| Halifax, Woolwich, Lloyds TSB, which also lends under the Cheltenham & Gloucester brand, First Direct which is part of HSBC, Royal Bank of Scotland and NatWest all announced they were going to cut their standard variable rate by half a percentage point. | |
| The last time the Bank of England cut rates in a special meeting was on 18 September 2001 - when rates were cut from 5% to 4.75%. |