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| UK banks' £37bn bail-out unveiled | UK banks' £37bn bail-out unveiled |
| (30 minutes later) | |
| The government is to inject up to £37bn of taxpayer cash into Royal Bank of Scotland (RBS) Lloyds TSB and HBOS. | |
| RBS is to raise £20bn, with chief executive Sir Fred Goodwin quitting the firm after his bank was forced to go to the Treasury for the bail-out. | |
| A further £17bn will be put into HBOS and Lloyds TSB. Barclays intends to raise £6.5bn without government help. | |
| The plans mean taxpayers will own about 60% of RBS and 40% of the merged Lloyds TSB and HBOS. | The plans mean taxpayers will own about 60% of RBS and 40% of the merged Lloyds TSB and HBOS. |
| The Treasury investment in the banks forms part of the government bail-out announced last week. | |
| 'Not permanent' It's not wrong to call it nationalisation but it's very different from Northern Rock. Shareholders will continue to own a big chunk of the banks Robert PestonBBC Business Editor Read Robert's blogTreasury's statement in full | |
| BBC business editor Robert Peston said the announcement would "count as perhaps the most extraordinary day in British banking history" and was "an absolute humiliation" for the banks. | BBC business editor Robert Peston said the announcement would "count as perhaps the most extraordinary day in British banking history" and was "an absolute humiliation" for the banks. |
| London's FTSE 100 index rose by about 5% as investors reacted to the news - with banks among the winners. | |
| The Treasury insisted that the government was "not a permanent investor in UK banks". | The Treasury insisted that the government was "not a permanent investor in UK banks". |
| "Its intention, over time, is to dispose of all the investments it is making as part of this scheme in an orderly way," it said. | "Its intention, over time, is to dispose of all the investments it is making as part of this scheme in an orderly way," it said. |
| As a condition of the deal, the government has insisted that senior directors should get no cash bonuses this year, with future bonuses to be paid in the form of shares - a move aimed at encouraging management to take a more long-term approach. | As a condition of the deal, the government has insisted that senior directors should get no cash bonuses this year, with future bonuses to be paid in the form of shares - a move aimed at encouraging management to take a more long-term approach. |
| RBS and Lloyds TSB/HBOS will also return mortgage and small-business lending to 2007 levels, which is much more than they are currently lending. | |
| "This is hugely significant given that a shortage of credit is to a large extent behind the economy's deceleration into recession levels," our business editor said. | |
| FROM THE TODAY PROGRAMME More from Today programme | FROM THE TODAY PROGRAMME More from Today programme |
| Dividend cancelled | Dividend cancelled |
| The government will buy £5bn of preference shares in RBS and another £15bn of ordinary shares if, as many expect, the bank is unable to find willing private investors. | The government will buy £5bn of preference shares in RBS and another £15bn of ordinary shares if, as many expect, the bank is unable to find willing private investors. |
| "It's immensely regretful we're coming to shareholders to raise funds again, it's something we feel bad about," said RBS chairman Sir Tom McKillop. | "It's immensely regretful we're coming to shareholders to raise funds again, it's something we feel bad about," said RBS chairman Sir Tom McKillop. |
| HBOS will raise £11.5bn from taxpayers, made up of £8.5bn in ordinary shares and £3bn in preference shares, while Lloyds TSB is to get £5.5bn. | |
| The money is conditional on the merger of the banks going through. | |
| Lloyds TSB and HBOS said the deal was still on, but that the terms had been renegotiated. | |
| A £12.2bn deal was agreed last month, but the value of HBOS shares has since plunged and the extent of the recapitalisation has highlighted its weakness. | A £12.2bn deal was agreed last month, but the value of HBOS shares has since plunged and the extent of the recapitalisation has highlighted its weakness. |
| Under the revised deal, HBOS shareholders will get 0.605 Lloyds TSB shares for every HBOS share they hold. Under the original deal they would have received 0.83 Lloyds TSB shares. | |
| 'No Rock' | 'No Rock' |
| Barclays has said it is to raise £6.5bn of new capital. The bank is to raise the money from private investors, rather than going to the government. | Barclays has said it is to raise £6.5bn of new capital. The bank is to raise the money from private investors, rather than going to the government. |
| Barclays also said it would scrap its final dividend payout for 2008, saving it £2bn. | Barclays also said it would scrap its final dividend payout for 2008, saving it £2bn. |
| Our business editor said it was not wrong to describe the part-ownership of RBS, Lloyds TSB and HBOS as nationalisation, but the situation was very different from Northern Rock and Bradford and Bingley, which had seen private investors lose their holding. | Our business editor said it was not wrong to describe the part-ownership of RBS, Lloyds TSB and HBOS as nationalisation, but the situation was very different from Northern Rock and Bradford and Bingley, which had seen private investors lose their holding. |
| "Shareholders will continue to own a big chunk of the banks," he said. |