Business

British PM announces $75B bank bailout package

The British government will inject nearly $75 billion of taxpayers' money into three of the country's largest banks to protect the institutions from collapse amid the global financial crisis, Prime Minister Gordon Brown announced Monday.

The British government will inject nearly $75 billion of taxpayers' money into three of the country's largest banks to protect the institutions from collapse amid the global financial crisis, Prime Minister Gordon Brown announced Monday.

The move means the government is effectively taking over the Royal Bank of Scotland and will also hold a large share of Lloyds/TSB and the Halifax Bank of Scotland, Brown said.

In announcing the details of the bailout package, Brown said the government had no choice but to act.

"The action we are taking today is unprecedented but essential to all of us," Brown told reporters. "We must in an uncertain and unstable world be the rock of stability upon which people can depend."

The response to the move and similar measures by other European governments to prop up their banks has largely been positive, as stock markets across Europe and Asia went up in Monday trading.

The government said that its investment in RBS, Lloyds and HBOS is not permanent, and that it intends to sell its shareholdings in an orderly way as soon as the market recovers.

In return for the financial lifeline, the banks accepting public money have agreed to the government's strict conditions, Brown said.

Board members have been let go, while the government also insisted that the bulk of future bonuses be paid in shares to ensure that bonuses encourage management to take a more long-term approach to profit-making.