The following banks have agreed to participate in the recapitalisation scheme which will make £25bn available now, to be injected in the form of preference shares for the banks and permanent interest bearing shares for the building societies (although at the request of banks this can be through ordinary shares). The amounts will vary from institution to institution, but they have committed to have this funding all in place by the end of the year.
· Abbey · Barclays · HBOS · HSBC Bank plc · Lloyds TSB · Nationwide Building Society · Royal Bank of Scotland · Standard Chartered
The government has stated that "if the Government is to provide the capital, the issue will carry terms and conditions that appropriately reflect the financial commitment being made by the taxpayer. In reaching agreement on capital investment the Government will need to take into account dividend policies and executive compensation practices and will require a full commitment to support lending to small businesses and home buyers."
If the above institutions decide to participate by utilising the available government funds (as opposed to raising the capital in the open market) they will become bound by the terms under which the money is provided, which as highlighted includes a commitment of lending to home buyers.
The government says it stands ready to put in another £25bn of support for all eligible institutions, which are defined as UK registered banks or UK registered arms of foreign banks that impact upon our economy. It may follow that more financial institutions will take up funding options and will therefore be bound by the same commitment.
nb HSBC has since stated that it will not be participating in the recapitalisation scheme, but supports the overall scheme.
