UK government unveiled a comprehensive £400 billion bailout/rescue plan for the UK banking sector designed to restore financial confidence, stability and credit flows to UK businesses and individuals.
This follows a state-financed capital injection of a sufficient size to ensure continued viability but without eradicating private shareholders.
-loss of taxpayers' money if equity investment is not subsequently retrieved
-how much management control is secured?
Biggest banking groups were bailed out by the state investing in them on taxpayer's behalf to keep them sound.
RBS = 58% gov stake. HBOS & Lloyds TSB combined (Lloyds banking group) = 43.5% gov stake.
-$250bn of $700bn. 'TARP' troubled asset relief programme funds used to recapitalise US banking system, with the 8 biggest recipients being:
Bank of America (including Merrill Lynch), $25bn.;
JP Morgan Chase, $25bn.;
Wells Fargo, $25bn.;
Goldman Sachs, $10bn.;
Morgan Stanley, $10bn.;
Bank of New York Mellon, $2bn.; and
State Street $3bn. [October, 2008]
-under a further bailout of Citigroup, another $20bn. of Trouble Asset Relief Programme money is used to buy preference shares in the bank, while the bank has to provide another $7bn. of preferred stock to the government in return for having its potential losses on $306bn. of toxic assets capped [November, 2008]
-Bank of America receives an additional $20bn. of TARP money [January, 2009]
-Fed pledges an additional $250bn. of loans to Citigroup [January 2009]