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| Britain mulls buying shares to recapitalise banks: reports |
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Time is GMT + 8 hours
Posted: 6-Oct-2008 10:30 hrs |
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| British Finance Minister Alastair Darling at the 2008 Labour Party Conference in Manchester, north-west England on September 22. Darling is considering giving British banks billions of pounds in return for shares to shore them up in the face of the global credit crunch, media reports has said. |
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The British government is considering shoring up ailing banks with billions of pounds in return for shares, media reports said Monday, as Germany raised the stakes in efforts to tackle the financial crisis.. Finance minister Alistair Darling came under renewed pressure to extend protection for savers Sunday after Germany said it was guaranteeing all private bank deposits amid fears its fourth biggest bank was about to collapse.. As he seeks solutions to the crisis, which ministers will discuss in a meeting of the new emergency economy committee Monday, Darling is reportedly mulling using public funds to take stakes in banks to help restore the system.. The plan is similar to one enacted by the Swedish government during its banking crisis in the 1990s, and would offer taxpayers a chance of recouping some of their investment when the banks' fortunes improve.. Darling hinted at his intentions in a BBC interview Sunday, saying: "I want to make it clear that we will do whatever it takes not only to stabilise the system but to help going forward, and that means perhaps some pretty big steps that we wouldn't take in ordinary times.". The leader of the main opposition Conservatives, David Cameron, signalled support for the plan in an article in Monday's Financial Times.. "It is possible to imagine the circumstances in which government injections of capital, with proper safeguards and strict conditions, may be the best way to safeguard the long-term interests of the taxpayer," he wrote.. Darling will make a statement to lawmakers Monday when parliament resumes after its summer break, when he is also likely to face pressure to match the guarantee of unlimited private savings promised by Germany's Angela Merkel.. The announcement, made amid rescue talks on stricken bank Hypo Real Estate (HRE), reportedly angered London, coming the day after German, British, French and Italian leaders held emergency talks in Paris on the financial crisis.. They pledged a more coordinated approach to prevent the meltdown in US financial markets from engulfing their own economies.. The Treasury said late Sunday it was still trying to work out the implications of the German move, which follows similar guarantees in Ireland and Greece, but opposition politicians said Britain would have to match it.. The government has pledged to increase the level of private savings it guarantees from 35,000 pounds to 50,000 pounds (64,000 euros, 88,000 dollars) per person, covering 98 percent of accounts and 60 percent of deposits.. But Nick Clegg, leader of the smaller opposition Liberal Democrats, said: "Germany is Europe's economic superpower. Where it leads, others are bound to follow.. "Ireland's action last week to guarantee all deposits made a common European approach to deposit guarantees necessary. Germany's decision today makes it completely unavoidable.". The British press agreed, although they condemned Berlin's move, with the populist Daily Mail calling it a "devastating act of duplicity" that put Darling and Prime Minister Gordon Brown "in an almost impossible position".. The Times said it "shattered any semblance of European unity", while the Daily Telegraph said "when it comes to the crunch, countries will act in the interests of their citizens, not those of an artificial political construct". — AFP
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