UK govt unveils £37bn bail-out for three banks

A dramatic rescue of British banking was under way today after the UK government unveiled a £37bn (€46.6bn) bail-out for three of Britain’s biggest banks.

Royal Bank of Scotland (RBS) is to raise £20bn (€25bn) of new capital through a government-guaranteed £15bn (€18.9bn) share issue and a £5bn (€6.3bn) government cash injection.

Lloyds TSB is also to raise £5.5bn (€6.9bn) of new capital, and said it was revising the terms of its acquisition of rival HBOS.

As part of the unprecedented deal, RBS’s under-fire boss Fred Goodwin, who asked investors for £12bn (€15bn) earlier this year to help shore up the group’s balance sheet, is also to step down.