Anaylsts were divided yesterday on whether Britain’s £250 billion) plan to prop-up some of the banks would be enough or it was inadequate.
The current plan is to use £50bn of taxpayers’ money to buy major portions of the country’s eight major financial institutions. This will provide short-term loans and issue a government guarantee on loans between the banks. The Bank of England will also be extending a £200bn line of credit for the banks.
The British bank plan itself – which covers Abbey, Barclays, HSBC Bank, HBOS, Lloyds TSB Bank, Nationwide Building Society, RBS and SC Bank – has had a mixed impact on shares in banks. Analysts seemed equally unconvinced of its effectiveness.
David Woo and Paul Robinson of Barclays Capital say “It will help UK policymakers get ahead of the crisis” They are part of the investment banking arm of Barclays, one of the participating banks.
But Howard Wheeldon of BGC Partners noted that the plan would have been more welcome if it had been earlier.
He said: “Perhaps a belated round of applause is probably the best way to greet the UK government plan aimed at providing much-needed financial market stability.”
Some lobby groups and union leaders were also displeased that Britain was using government funds to rescue so- called “fat cats” working for the country’s banks. — S apa-AFP
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