Sunday, February 22, 2009

RBS and Lloyds in £500 billion Treasury deal

Gordon Brown, the Prime Minister, and Alistair Darling, the Chancellor, will meet with the Treasury's advisers in Whitehall tonight to hammer out details of the programme, which will involve the creation of a new class of non-voting shares to allow the banks to fund their participation.

Central to the negotiations will be the form of payment used by the banks to insure the assets proposed for inclusion in the scheme. Last night, people close to the discussions said it would see a new type of capital instrument devised that includes a dividend entitlement. However, because the new shares would not include voting rights, their issuance would not be dilutive to existing shareholders...

The solution avoids the immediate prospect of outright nationalisation for the two banks, which are both likely to be charged billions of pounds for their participation in the Treasury scheme. A Treasury source said "There will be some insurance provided for some assets, with the exact figure to be agreed and decided. Our priority is to get some conditions attached to that in the form of additional lending."

Another nationalisation deal that isn't nationalization!

It's the Geithner blueprint.

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