LONDON // Three major British banks could take £37billion (Dh223bn) in government money to boost their capital, the UK Treasury said today. Royal Bank of Scotland said in a statement it will boost its capital by £20bn, including the UK government taking £5bn in preference shares and £15bn pounds underwritten by the government. HBOS and Lloyds TSB will also participate in the government scheme "upon successful merger", according to the Treasury.
Barclays said in a separate statement it would boost its capital by more than £6.5bn but expected to do so without government help. Banks will try to sell shares to existing investors, backed up by the government, which will buy the shares not taken up. The RBS chief executive Fred Goodwin resigned and will be replaced by Stephen Hester, chief executive for British Land. The rescue plan could result in the government becoming the biggest shareholder, and even a majority investor, in Royal Bank of Scotland and a combined HBOS/Lloyds TSB.
The banks will try to sell shares to existing investors, backed by the government, which would buy the shares not taken by investors. In addition to potentially taking ordinary shares, the government will provide capital in return for preference shares, which could pay an annual dividend of about 10 per cent but typically do not have voting rights. * Reuters
