Times Online

October 12, 2008

Brown sells British bank bailout plan to Eurozone countries

President Sarkozy welcomes Gordon Brown in Paris. The Prime Minister has enjoyed a political renaissance during the financial crisis.......

(( wait until the recession bites..... then lets judge perhaps ))

Gordon Brown arrived at the Elysee Palace in Paris today for the latest international leg of his campaign to promote a British bank bailout plan among world leaders............

Despite the UK not being part of the euro, the Prime Minister met President Nicolas Sarkozy of France ahead of a summit of the 15 eurozone members and will brief them on the plan in which the Government will inject billions of pounds into struggling banks in return for preferential shares.

The plan is being looked upon favourably by Western leaders – including the Bush Administration – as a way of injecting confidence and liquidity into the financial system whilst retaining a politically favourable stake for the taxpayer. Europe also looks set to follow suit.

This weekend exact details began to emerge about how much the British Government will inject into the top UK banks.

The unprecedented move will make the government the biggest shareholder in at least two banks. Royal Bank of Scotland (RBS), which has seen its market value fall to below £12 billion, is to ask ministers to underwrite a £15 billion cash call. Halifax Bank of Scotland (HBOS), Britain’s biggest provider of mortgages, is seeking up to £10 billion.

Lloyds TSB, which is in the process of acquiring HBOS in a rescue merger, wants £7 billion, while Barclays needs £3 billion...........

The scale of the fundraising could lead to trading at the London stock market being suspended. This would give time for the market to digest the impact of the moves.

Mr Sarkozy predicted “an ambitious, coordinated” European plan to contain the crisis, details of which were expected to be announced later on Sunday. Jose Manuel Barroso, European Commission president, said before entering the European talks: “We now need an unprecedented level of coordination to deal with this unprecedented crisis."

Mr Brown warned: “For Europe, the stakes could not be higher and this is a moment of truth. No country – not even the biggest – can make it just on their own at a time like this. We are all in it together and have to work to solve it together."

In Washington this weekend the G7 group of national agreed a plan to help rescue the markets from freefall that was vague on details, but commits countries to support the most important institutions, take measures to get credit flowing, assist banks in raising capital and reassure savers.

The Group of 20 countries which account for 85 percent of the global economy said they had agreed to use “all financial and economic tools” to back the effort. President Bush said the world’s richest economies were united on a “serious global response” to the financial meltdown.

Christine Lagarde, the French Finance Minister, promised that the European packages would be “specific” and that markets would not be “disappointed”. ---