British banks to get cash infusion from government

The Associated Press ,  London   |  Mon, 10/13/2008 2:33 PM  |  Business

Three of Britain's largest banks said Monday they planned to take up to 37 billion pounds (US$63 billion) in government money to boost their balance sheets.

Royal Bank of Scotland Group PLC said it would raise 20 billion pounds (US$34 billion) worth of capital, with the government buying 5 billion pounds (US$8.6 billion) of preference shares directly and underwriting 15 billion pounds (US$25.7 billion) of ordinary shares.

The government will inject a further 17 billion pounds (US$29.2 billion) into Lloyds TSB Group PLC and HBOS PLC, which are merging, the banks said. Lloyds and HBOS also said the terms of their merger would be altered so that Lloyds would pay less than previously agreed for HBOS.

Barclays PLC said it would increase its capital by at least 6.5 billion pounds (US$11.4 billion), but without government help.

There were several high-level casualties resulting from the announcements.

RBS's chief executive, Fred Goodwin, is being replaced by Stephen Hester, currently chief executive of British Land. Chairman Tom McKillop will be retiring at the group's annual meeting in April. And RBS's chairman of global markets, Johnny Cameron, will leave the board immediately.

HBOS and Lloyds said that, once their merger goes through, HBOS' chairman and chief executive would both be leaving the group.

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