The British Treasury may appoint its own representatives to the boards of the country’s biggest banks as it begins buying stakes in them over the next few weeks, a government official said.
Policy makers need to consider how to protect taxpayers’ interests when taking significant stakes in lenders, said the official, who spoke on condition of anonymity.
Governments in Europe and North America are preparing plans to buy stakes in banks to alleviate the credit freeze threatening to tip the world into a recession. The UK’s plan contrasts with the US, where Treasury Secretary Henry Paulson said two days ago that US authorities would have non-voting shares.
The UK government last week said it would invest at least £50 billion (US$87 billion) to recapitalize Royal Bank of Scotland Group Plc, Barclays Plc and at least six others.
Britain’s program may be big enough to give the government a controlling stake in some lenders.
Edinburgh-based RBS, with a market capitalization of £11.9 billion, will seek about £10 billion from investors and the government, a person familiar with the matter said. Barclays’s market capitalization is £17.4 billion.
UK Treasury officials have been working with the banks on the program and today will begin outlining details of a related plan to guarantee about £250 billion in interbank loans though an insurance system.
Once it has unveiled how it will price the insurance policies, regulators will begin talking to banks about capital injections and what share of their business is nationalized.
“We are working hard toward implementation,” Chancellor of the Exchequer Alistair Darling told reporters in Washington. “We will be doing something pretty quickly. It is essential we take action here in the UK.”
British Prime Minister Gordon Brown’s government last week was forced to step up its efforts as Britain lurched toward a recession and shares of the country’s biggest banks lost more than half their value in a week. Since then, Darling has been urging fellow finance ministers in Washington to adopt similar plans to rebuild bank balance sheets.
Paulson signaled his top priority is getting his initiative to buy financial stocks running as soon as he can: “This is a plan that I’m quite confident will work.”
Canada’s government last week moved to shore up its banks by saying it will buy as much as C$25 billion (US$21.6 billion) in mortgages from them. The German government will create a fund of as much as 100 billion euros (US$134 billion) to recapitalize German banks hurt by the financial-market crisis, Handelsblatt newspaper reported, without identifying its sources.
Finance ministers and central bankers from the G7 major nations, meeting in Washington on Friday, agreed to ensure that key banks will get access to liquidity, funding and taxpayer funds as capital.
RBS, Britain’s third-largest bank by market value, had its credit rating cut by Standard & Poor’s for the first time in almost a decade on concern that its financial health was deteriorating last week.
The steps to partially nationalize the industry provide “essential preconditions” to kick-start lending, Darling said.
“We had to say to banks: you recapitalize and, if you do that, we will guarantee your inter-bank lending,” he said. “That’s what they need in order to get the funds they need.”
RESPONSE: The transit sends a message that China’s alignment with other countries would not deter the West from defending freedom of navigation, an academic said Canadian frigate the Ville de Quebec and Australian guided-missile destroyer the Brisbane transited the Taiwan Strait yesterday morning, the first time the two nations have conducted a joint freedom of navigation operation. The Canadian and Australian militaries did not immediately respond to requests for comment. The Ministry of National Defense declined to confirm the passage, saying only that Taiwan’s armed forces had deployed surveillance and reconnaissance assets, along with warships and combat aircraft, to safeguard security across the Strait. The two vessels were observed transiting northward along the eastern side of the Taiwan Strait’s median line, with Japan being their most likely destination,
GLOBAL ISSUE: If China annexes Taiwan, ‘it will not stop its expansion there, as it only becomes stronger and has more force to expand further,’ the president said China’s military and diplomatic expansion is not a sole issue for Taiwan, but one that risks world peace, President William Lai (賴清德) said yesterday, adding that Taiwan would stand with the alliance of democratic countries to preserve peace through deterrence. Lai made the remark in an exclusive interview with the Chinese-language Liberty Times (sister paper of the Taipei Times). “China is strategically pushing forward to change the international order,” Lai said, adding that China established the Asia Infrastructure Investment Bank, launched the Belt and Road Initiative, and pushed for yuan internationalization, because it wants to replace the democratic rules-based international
The National Development Council (NDC) yesterday unveiled details of new regulations that ease restrictions on foreigners working or living in Taiwan, as part of a bid to attract skilled workers from abroad. The regulations, which could go into effect in the first quarter of next year, stem from amendments to the Act for the Recruitment and Employment of Foreign Professionals (外國專業人才延攬及僱用法) passed by lawmakers on Aug. 29. Students categorized as “overseas compatriots” would be allowed to stay and work in Taiwan in the two years after their graduation without obtaining additional permits, doing away with the evaluation process that is currently required,
ECONOMIC BOOST: Should the more than 23 million people eligible for the NT$10,000 handouts spend them the same way as in 2023, GDP could rise 0.5 percent, an official said Universal cash handouts of NT$10,000 (US$330) are to be disbursed late next month at the earliest — including to permanent residents and foreign residents married to Taiwanese — pending legislative approval, the Ministry of Finance said yesterday. The Executive Yuan yesterday approved the Special Act for Strengthening Economic, Social and National Security Resilience in Response to International Circumstances (因應國際情勢強化經濟社會及民生國安韌性特別條例). The NT$550 billion special budget includes NT$236 billion for the cash handouts, plus an additional NT$20 billion set aside as reserve funds, expected to be used to support industries. Handouts might begin one month after the bill is promulgated and would be completed within
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