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Special> Global Financial Crisis> Latest
UPDATED: January 20, 2009
Britain Announces Bank Rescue Package of Over $400 bln


A street light glows in front of the Barclays Bank offices in the Canary Wharf business district in London Jan. 19, 2009. (Xinhua/Reuters Photo) 

The British government unveiled a 300-billion-pound (about 438 billion U.S. dollars) rescue package on Monday in an attempt to make the banks resume normal lending.

The insurance scheme, announced by Prime Minister Gordon Grown and Chancellor Alistair Darling is, as they said, to protect banks from so-called toxic assets, a move which it is hoped will encourage institutions to restart lending to businesses and households.

"This is not a blank cheque," Brown said, but a plan to turn the banks back to normal.

"If we do not do anything, the cost will be far, far greater," Brown said.

The move follows last year's injection of 37 billion pounds (about 54 billion dollars) into the banks, which appeared to ease the crisis but failed to solve it.

The likely impact of the rescue plans will be "temporary," as investments will be held for no longer than is necessary to ensure stability and protect taxpayer interests. Liabilities will be backed by assets, said Darling.

Despite the new bank rescue packages, Barclays topped the list of falling shares on London market with a 7.55 percent down at 10:30 as the government announced the plans.

Barclays lost almost a quarter of its value on Friday, while Royal Balk of Scotland lost 13 percent, and Lloyds and HBOS shares fell 5 percent and 2 percent respectively.

Royal Bank of Scotland also reached agreement with the Treasury to replace 5 billion pounds (about 7.3 billion dollars) of preference shares with new ordinary shares, effectively increasing the government's stake in the bank.

(Xinhua News Agency January 19, 2009)

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