Related Companies

• Royal Bank of Scotland Group
• Barclays
• HBOS
• Lloyds TSB Group

Related Indices

• FTSE All-Share
• FTSEurofirst 300
• FTSE 350
• FTSE 100

Related Sectors

• Banks

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Your money can work for you! Get it going with one of this month’s high interest current accounts:

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2. Coventry First Account
3. Co-operative Current Plus

Date: Monday 13 Oct 2008

LONDON (ShareCast) - A big chunk of Britain's bank sector could move into state ownership today with the government set to pump in £40bn of new equity to recapitalise the ailing industry.

Royal Bank of Scotland chief executive Fred Goodwin is widely expected to step down with the bank tipped to raise up to £20bn from the government. The bail-out comes just months after it raised £12bn in the UK's largest ever rights issue.

HBOS is also expected to come under state control after asking for £12bn while its merger with Lloyds TSB is also under serious doubt given the likely huge change expected in HBOS's ownership structure. Lloyds itself is tipped to raise £7bn and is expected to to least consider a change to the terms of the HBOS deal.

Barclays is said to want under £5bn but is still exploring ways of raising the funds from private sources and without government help.

Weekend reports suggested that the terms of Royal Bank's £20bn cash call would be £15bn through a placing of new shares with the government and the remainder coming from new preferred shares, also issued to the state.

The ordinary shares will be offered to existing shareholders but the government could still end up with a 60% stake.

As part of the package, chancellor Alistair Darling is also to offer government guarantees on interbank lending, putting its own representatives on the boards of rescued banks and will insist they re-start lending to small businesses again.

Any shares bought by the government will be placed in a newly created bank reconstruction fund that would hold the shares until market conditions improve.

• News Channel