UK could take board seats at banks-govt source
WASHINGTON Oct 11 (Reuters) - The British government could end up with seats on the boards of major retail banks, a government source said on Saturday.
Britain this week announced plans to provide up to 50 billion pounds of new capital to banks in an effort to calm the global crisis, which is threatening to derail the whole financial system.
Prime Minister Gordon Brown said there would be "strings attached" to the use of public money to shore up the banks' balance sheets in the form of curbs on executive pay and guarantees to keep credit lines open to small businesses.
While the government plans involve it buying preference shares in the banks, which normally do not have voting rights, the source said the government could still end up on boards and having a say in the running of the banks.
"Clearly if you have a significant stake, you are going to have to think from the point of view of protecting your interest how you would take more control," the source said.
Royal Bank of Scotland's (RBS.L) market capitalisation fell below 12 billion pounds on Friday and there have been media reports that it could seek additional capital of 10 billion pounds.
Options for RBS and others include issuing ordinary shares or preference shares to existing shareholders as well as issuing preference shares to the government.
The government could conceivably in such circumstances even end up with majority control of some of the banks.
Finance minister Alistair Darling will make more details of how the funding plan would work on Monday, including details of how the government's guarantee of interbank lending will work.
"We are working hard toward implementation," Darling told reporters while at the annual meetings of the International Monetary Fund and World Bank.
Industry sources say banks could disclose more details of their recapitalisation plans early next week. (Additional reporting by Steve Slater in London; Editing by Neil Stempleman)
- Pennsylvania newlyweds "just wanted to murder someone together:" police
- WTO overcomes last minute hitch to reach its first global trade deal
- U.S. freeze shows no sign of weekend melt after deadly storm
- Colorado baker discriminated by denying gay couple wedding cake: judge
- North Korea frees U.S. Korean War veteran after seven weeks |