London: The British government will increase its stake in Royal Bank of Scotland (RBS) to about 70%, as the treasury is likely to guarantee at least £100 billion of new lending, a media report says.
“The Treasury will tomorrow drastically revise the terms of last October’s bank bailout and say it will guarantee at least £100 billion of new lending,” the Sunday Times said.
As per the new rescue plan, the government would offer guarantees on new consumer loans, outline plans to ringfence “toxic” assets on bank balance sheets and propose to refinance the preference shares that were used to rescue Royal Bank of Scotland and HBOS.
The Sunday Timesfurther said as part of the deal, “the taxpayers stake in Royal Bank of Scotland could jump from 57.9% to about 70%”.
The newspaper said, “Britains bank bosses are on standby to be called to Downing Street today or tomorrow to hear details of the new rescue plan.”
Quoting officials the report said, “the scale of the guarantees was difficult to determine at this stage as they would depend on demand from the lenders and the appetite for borrowing in an economy heading into deep recession.”
“After months of pressure from the banks, ministers have agreed to soften the terms of the £37 billion autumn recapitalisation of Royal Bank of Scotland, Lloyds TSB and HBOS,” the newspaper added.
The announcement would focus on measures to get the banks through the crisis and to boost lending. The main measures to boost bank lending would involve government guarantees.