LONDON: Three major British banks could take GBP 37 billion ($64 billion) in government money to boost their capital, the UK treasury said. Royal Bank of Scotland (RBS) said in a statement it will boost capital by GBP 20 billion including the UK government taking GBP 5 billion in preference shares and GBP 15 billion underwritten by the government.

HBOS and Lloyds TSB will also participate in the government scheme “upon successful merger,” the treasury said in a statement on Monday.

Barclays said in a separate statement it would boost capital by more than GBP 6.5 billion 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.

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.

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% but typically do not have voting rights.

source: Utvi

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