This is an increasing sign of Europe’s bail out becoming a buy out. The U.K. government has unveiled plans to inject up to £37 billion ($63 billion) into Royal Bank Of Scotland Group PLC (RBS) and the soon to be combined HBOS PLC and Lloyds TSB Group LLC, reports Wall Street Journal.
The prime minister said the dramatic action would help the UK banking industry to survive the turbulence sweeping the world’s financial system, and also pledged to end the era of “rewards for failure” for top executives. The government will take a controlling stake of up to 60% in RBS, in return for up to £20bn from the taxpayer.
In return for providing fresh liquidity, the government has secured a series of concessions. RBS and Lloyds have both agreed not to pay a dividend this year – and possibly for several more – and to help people who are struggling to pay their mortgages. They will not pay any cash bonuses this year, and have agreed to let the government appoint several board members, reports Guardian.