Government reveals rescue package
08 October 2008
The UK government has today confirmed a bailout plan for the UK banking system.
A £50 billion rescue package has been confirmed which will, in essence, see the banks be part-nationalised.
Prime Minister Gordon Brown and Chancellor Alistair Darling said that taxpayers' money will be used to bail out the organisations in a bid to help them return to normality.
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Such a move, Mr Darling believes, will help to get banks lending to each other again, which in turn will increase confidence and allow them to lend to the public again.
"This is beginning a process of un-bunging a big problem where banks won't lend to each other for long periods," he said.
As well as the £50 billion rescue package, some £200 billion will become available from the Bank of England under the Special Liquidity Scheme.
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The government believes the scheme it has introduced will be more effective than the recent bailout from the US government, as it is effectively investing in the UK banks, so a return on the investment could be made.
Institutions that have confirmed their participation in the rescue plan are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered.
