HBOS, Britain's biggest provider of mortgages, was seeking up to £10 billion. -- PHOTO: AFP
LONDON - THE British government is preparing to take
controlling stakes in Royal Bank of Scotland and HBOS, two of the banks worst affected by the financial crisis, reports said on Sunday.
The unprecedented move would make the government the biggest shareholder in the banks and government representatives would be installed on their boards, the Sunday Times and Sunday Telegraph newspapers reported.
The scale of the rescue plan could go beyond the 50-billion-pound (S$129 billion) bailout for the British banking sector announced by the government on Wednesday, with the government now prepared to
make 75 billion pounds available, the Sunday Times said.
The Sunday Times said RBS, which has seen its shares plummet by about 80 per cent since the credit crunch began, would ask the government for 15 billion
pounds in return for a controlling stake.
HBOS, which is Britain's biggest home loan provider, will ask for 10 billion pounds, the newspaper said, in its unsourced report.
The scale of the operation could lead to trading in the banks on the London stock market being suspended, the reports said.
The move would leave the government owning 70 per cent of HBOS and 50 per cent of RBS, the Sunday Times said.
RBS and HBOS declined to comment on the reports, but an industry source told AFP that the banks could make an announcement on Monday.
The British government has already nationalised two smaller banks, Northern Rock and Bradford and Bingley. -- AFP
