LONDON (Reuters) - The British government on Monday announced plans to give three leading banks a 37 billion pound ($64 billion) cash injection aimed at strengthening their capital reserves in the face of the credit crunch.
The government will take equity stakes in each of the banks — Royal Bank of Scotland, Lloyds TSB, and HBOS — while Barclays has said it will raise 6.5 billion pounds from investors without recourse to public funds.
Here are some key facts about the banks’ recapitalization plans:
- To raise a total of 20 billion pounds through a 15 billion pound issue of ordinary shares, and the sale of 5 billion pounds in preference shares to the government. The Government will underwrite the issue of ordinary shares.
- RBS Chief Executive Sir Fred Goodwin and Chairman Sir Tom McKillop to step down.
- Government to become RBS’s majority owner with a 57 percent stake assuming existing shareholders do not participate in the ordinary share issue.
- Dividends on ordinary shares canceled until the preference shares are repaid.
LLOYDS TSB & HBOS
- Merger partners Lloyds and HBOS negotiate new terms for their previously announced tie up, with HBOS shareholders now receiving 0.605 Lloyds share per HBOS share, down from 0.833 agreed in September.
- The two banks will raise a combined 17 billion pounds, with HBOS taking 11.5 billion pounds, including 3 billion through the sale of preference shares. Lloyds is to receive 5.5 billion pounds, including 1 billion in preference shares.
- HBOS Chief Executive Andy Hornby and Chairman Dennis Stevenson to step down.
- Government to hold a 43.5 percent stake in the combined group, assuming no take-up of new shares by existing investors. - Combined group to cancel dividend on ordinary shares while any preference shares are still outstanding.
- To raise 6.5 billion pounds, including about 3 billion pounds in preference shares, without calling on the government for funding.
- Final dividend for 2008, worth about 2 billion pounds, is canceled. Shareholder payouts to resume in the second half of 2009.
- The bank says it remains eligible for government funding if its own capital-raising falls through.
Sources: Royal Bank of Scotland, Barclays, HBOS, Lloyds TSB
(Reporting by Myles Neligan; Editing by Erica Billingham)