As the financial crisis becomes international in scope (fantastic!), the British government finally revealed how they plan to avert their own banking meltdown.
Bloomberg: Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group will get an unprecedented 37 billion-pound ($64 billion) bailout from the U.K. as governments across Europe act to avert a banking collapse.
In exchange, Edinburgh-based Royal Bank of Scotland and HBOS will cede majority control to the government, give Prime Minister Gordon Brown seats on their boards, the right to fix dividends, and power to set executives’ pay…
RBS will get 20 billion pounds, while HBOS and Lloyds will raise 17 billion pounds between them, the companies said in separate statements today. The government is set to take majority control of the two banks, owning as much as 60 per cent of RBS and 58 per cent of HBOS. Barclays Plc said it will try to raise more than 6.5 billion pounds without the government’s help.
The takeovers mark the implementation of a 50 billion- pound rescue package announced by Brown last week for British banks struggling under seized-up credit markets and a plunge in home prices. In the past year, the government nationalized lenders Northern Rock Plc and Bradford & Bingley Plc, and brokered the sale of HBOS to Lloyds TSB Group Plc.
Oh, by the way, this means the heads of all of these firms are out:
Fred, Andy, we hardly knew ye…
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