Barclays, RBS in Talks on U.K. Government Funding
RBS and Barclays banks in the UK are thought to be the next to be in trouble, with shares in both banks plummeting today. It is thought that the UK government is going to take partial ownership in both banks.
The U.K. government may invest at least 45 billion pounds ($79 billion) in banks including Royal Bank of Scotland Group Plc and Barclays Plc to bolster capital depleted by mortgage-related losses, two people with knowledge of the situation said.
Chancellor of the Exchequer Alistair Darling and Bank of England Governor Mervyn King met with banking chief executive officers including RBS's Fred Goodwin and Barclays's John Varley late yesterday to discuss the investment, said the people, who declined to be identified because the meeting was confidential.
RBS fell as much as 39 percent after Standard & Poor's cut the company's credit rating for the first time in almost a decade, as the Edinburgh-based bank's financial condition deteriorates. The government has already bailed out Bradford & Bingley Plc and brokered the takeover of HBOS Plc in the past month on concern about the banks' ability to fund themselves. Darling said yesterday he will do ``whatever it takes'' to keep the financial system stable as capital markets remain frozen.