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RBS, Lloyds Get $51 Billion in Second Bank Bailout
Jon Menon and Andrew MacAskill
Bloomberg
Tuesday, Nov 3rd, 2009
Royal Bank of Scotland Group Plc and Lloyds Banking
Group Plc will receive 31.3 billion pounds ($51 billion) in
a second bailout from the U.K. taxpayer as the two banks agreed
to cap bonuses.
The Treasury will inject 25.5 billion pounds of capital into
RBS, for a total of 45.5 billion pounds, making it the costliest
bailout of any bank worldwide. The government will fund about
a quarter of Lloyds’s 21 billion-pound fundraising. Both
banks said they won’t pay cash bonuses to workers earning
more than 39,000 pounds this year.
The rescue will bring the government closer to full ownership
over RBS, while Lloyds will escape government control. Lloyds
CEO Eric Daniels will raise funds from money managers to avoid
the Treasury’s asset insurance plan that would give the
government a majority stake. He’s betting bad loans will
decline after the Bank of England said the country’s recession
was nearly over. In contrast, Stephen Hester, RBS’s CEO,
will accept greater government oversight and insure 282 billion
pounds of his banks’ riskiest assets with the Treasury.
“There is now a very fine line between RBS being nationalized,”
said Danny Gabay, director of Fathom Consulting in London and
a former Bank of England economist. “This contrasts with
Lloyds willing to fight harder for its independence.”
Full
article here
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