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LONDON: British finance minister Alistair Darling is considering giving banks billions of pounds in return for shares to shore them up in the face of the global credit crunch, media reports said Monday.
The plan is a middle way between full nationalisation, as with Northern Rock and Bradford & Bingley banks, and further loans, and echoes a similar operation by the Swedish government during its banking crisis in the 1990s, they said.
Darling hinted at the plan in a BBC interview Sunday, saying he was prepared to take 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, which would offer taxpayers a chance of a return on their investment when banks improve.
Darling is expected to make a statement to lawmakers Monday when parliament resumes after its summer break, where he may also set out Britain's response to Germany's offer of a blanket guarantee to all bank savings.
The announcement Sunday by Chancellor Angela Merkel reportedly sparked anger in London, coming the day after she met with the leaders of France, Britain and Italy in an emergency summit in Paris Saturday to discuss the crisis.
They pledged a more coordinated approach to prevent the meltdown in US financial markets from engulfing their own economies.
The British Treasury said late Sunday it was still trying to work out the implications of the German move, which echoed similar guarantees in Ireland and Greece, but opposition politicians said London would have to follow suit.
Britain has promised to increase the level of private savings guaranteed by the government from 35,000 pounds to 50,000 pounds (US$88,000) per person, covering 98 per cent of accounts.
But Nick Clegg, leader of the smaller opposition Liberal Democrats warned: "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."
- AFP/yb
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