New rescue plan announced for banks

19/01/2009

The government launched a new plan aimed at making Britain's banks lend more to consumers today.

Under the terms of the scheme, banks and the Treasury will agree on how much more the banks stand to lose from "toxic debts" held on their balance sheets.

The government will then cover 90 per cent of any additional losses the firms suffer.

In this way, it is hoped, extra confidence will be given to the financial system - with banks more willing to extend credit than before.

Chancellor of the exchequer Alistair Darling also confirmed to the BBC that the banks are also facing "legally binding agreements to lend more money", should they enter into the insurance scheme.

Last October, the government launched its first rescue package for the financial system, which saw £37 billion of public money spent on buying shares in banks.

As a result, the taxpayer now owns the majority of RBS and around 43 per cent of the merged HBOS/Lloyds TSB.

Tags; Debt Management and Banking, Young Family Finances, Recent Graduate Debt,

• Share
• 
• 
• Store
• 
• Follow
•