MAIN POINTS OF BANK BAIL-OUT

Oct 8 2008 Evening Gazette

Taxpayers’ money will be used to buy stakes in major banks in an attempt to halt the meltdown in the financial sector. The Treasury insists the taxpayer will not lose out and it expects a return on the investment as well as a return to financial stability from the package.

The Government is also demanding that in return for the public-backed cash injection, banks must cap executive pay and shareholder dividends and commit to supporting lending to homebuyers and small businesses.

Eight UK banks and building societies - including RBS, Barclays, HBOS, Lloyds TSB and Nationwide - have signed up to an initial £25bn scheme.

The Treasury stands ready to make at least another £25bn available for other eligible institutions.

The Bank of England is also extending from £50bn to £200bn an existing Special Liquidity Scheme - which makes money available to banks on a day-to-day basis to plug the gap left by their fear of lending to each other.

A further £250bn is being pumped in under a debt guarantee scheme.