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UK - Financial crisis: Nationalisation fears as ministers prepare to control banks
The Treasury is prepared to take controlling stakes in Britain's biggest banks and to put government representatives on their boards to halt the financial crisis, it was disclosed. The Government will do "anything it takes" to prevent the financial system collapsing, including taking more than 50 per cent stakes in banks, sources said.The radical proposals go significantly further than Gordon Brown's original bail-out unveiled last week. It will spark suspicions that the Prime Minister may have to take more drastic action, even going so far as to nationalise the entire banking system. Nationalize the entire English banking system? The development came after the Group of Seven (G7) leading finance ministers pledged to follow Britain's lead and part-nationalise vast sections of the Western banking system in their latest effort to bring the crisis to a close. At their summit in Washington the G7 promised to buy shares in struggling banks if necessary in the coming months. With shares in major markets plunging by a fifth last week, ministers hope that the commitment will boost confidence in the coming week. Following the talks, US President George W Bush said: "We must ensure the actions of one country do not contradict or undermine the actions of another. "In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together." Mr Brown will fly to Paris on Sunday to urge European leaders to follow the "British model" of handling the credit crunch by propping up their ailing banks with taxpayers' money. The Prime Minister will deliver his message in an unprecedented appearance at a meeting of leaders of the "eurozone" countries in the French capital. Britain -- which retains its own currency and is outside the eurozone -- is normally excluded from such gatherings but Mr Brown has been invited to the emergency session to discuss how to save stricken lenders and stave off another meltdown next week on European markets. Posted by: 3dc 2008-10-12 |
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