Summary
The Government is looking at rescuing British banks by taking shares in them. How will that work? The idea is that rather than just throw money at the banks as in the $700 billion Paulson rescue plan in the US, to relieve struggling Wall Street institutions of their liabilities the UK government would offer cash injections to individual banks but in return for a stake in the company in shares. So rather than see taxpayer money simply sucked in to keep the banking system afloat, the cash not only saves the economy but could get some upside if and when banks recover with the money invested potentially reaping a profit if shares rise.
Has this been tried before? Yes. The model is a bailout of the Swedish banking system in 1992. The Stockholm government pumped in the equivalent of $18 billion, or around four per cent of the country's gross domestic product. And, depending on how you calculate it, it worked. The Swedish banking system remained intact and the Swedish taxpayer lost little or nothing.See the full content of this document
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Q & A
How expensive will it be here? Potentially the initial c...
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