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LONDON: Britain's government on Monday said it planned to invest up to 37 billion pounds (47 billion euros, 64 billion dollars) in ailing British banks Royal Bank of Scotland, HBOS and Lloyds TSB.
As shares in London soared on the news, Finance Minister Alistair Darling said he hoped other countries caught in the global financial crisis would use Britain's bank bailout plan as a model.
"With continuing exceptional instability in the global financial markets, the government is today taking decisive action... to make commercial investments in UK banks," the Treasury said in a statement.
"It is now clear that this is a model that other countries are going to adopt because this is a truly global problem," Darling added on BBC radio.
Darling said the government would take a stake in RBS worth just over 60 per cent, while the stake in the combined HBOS and Lloyds TSB entity would be about 40 per cent.
RBS said it intended to raise 20 billion pounds with the help of the government, adding that its chief executive Fred Goodwin would step down as RBS looks to recover from the credit crunch.
The Scottish bank said it intended to raise 15 billion pounds from investors, an amount that would be underwritten by the government.
Taxpayers' money would meanwhile be used to buy five billion pounds worth of shares directly from RBS, the bank said in a statement.
Barclays bank said it intended to raise more than 6.5 billion pounds only from investors, turning down an offer of government help.
"Given the strength of Barclays' well-diversified business and the existing capital base, the board expects that the additional capital will be raised from investors without calling on the government funding which has been offered," Barclays said in its own statement.
The government's announcement was the first implementation of a rescue package for banks announced last week, in which it made available 50 billion pounds to inject cash into financial institutions in return for shares.
Darling said the government was injecting "very substantial sums" into the banks in order to stabilise the system.
"It is necessary because we are going through quite extraordinary circumstances the world over," Darling told GMTV television. "I believe that what we are doing will help, it will go a long, long way to reassuring people.
"There is a lot of turbulence to go through yet, there are a lot of bumps along the way, but I believe that this first step will help in two respects.
"First, it makes our banks strong. Secondly, of course, it is beginning the process of making lending easier."
Darling said the government was appointing three directors to the RBS board and two to Lloyds TSB.
"There will be restrictions on what happens on boardroom pay and we are also getting guarantees in relation to increased lending to businesses, as well as to mortgages too," he said.
London's stock market surged more than five percent in early trading on Monday after British leading banks accepted the billions of pounds of taxpayers' money to prop up their ailing institutions.
The Times newspaper said Monday's action marked the "most dramatic extension of state ownership in the British economy since the war".
"October 13, 2008, will go down in history as the day the capitalist system in Britain admitted defeat," said The Daily Telegraph newspaper.
Re-capitalisation, which would effectively see the banks part-nationalised, was the most eye-catching feature of the government's three-part rescue package unveiled last week.
The plan also makes available 450 billion pounds in cash for banks and guarantees, to encourage banks to start lending to each other again, a crucial function for the world economy.
- AFP/so
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