WORLD> Europe
British banks to get $63B infusion from government
(Agencies)
Updated: 2008-10-13 17:15

LONDON -- The British government said Monday it would provide up to $63 billion to boost the balance sheets of three of Britain's largest banks but demanded in return the departure of some of the country's top bankers.

A Barclays bank logo pictured in central London on October 1. Barclays, one of Britain's leading banks, has said it plans to raise more than 6.5 billion pounds (US$11.13-billion) from investors, turning down the offer of government help. [Agencies] 

"The action we are taking today is unprecedented but essential to all of us," British Prime Minister Gordon Brown said at a press conference.

"The government cannot just leave people on their own to be buffeted about," he said. "We must in an uncertain and unstable world be the rock of stability upon which people can depend."

Royal Bank of Scotland Group PLC said it will raise $34 billion worth of capital, with the government buying $8.6 billion of preference shares directly and underwriting $25.7 billion of ordinary shares.

The government will inject another $29.2 billion into Lloyds TSB Group PLC and HBOS PLC, two banks that are in the process of merging, the banks said

Lloyds and HBOS also said the terms of their merger would be altered so that Lloyds would pay less for HBOS than what was previously agreed.

Barclays PLC said it would increase its capital by at least $11.4 billion, but without government help.

There was high-level shuffling resulting from the announcements.

RBS's chief executive, Fred Goodwin, is being replaced by Stephen Hester, currently chief executive of British Land. Chairman Tom McKillop will be retiring at the group's annual meeting in April. And RBS' chairman of global markets, Johnny Cameron, will leave the board immediately.

HBOS and Lloyds said that, once their merger goes through, HBOS' chairman and chief executive would both be leaving the group.