President George W Bush has announced an injection of $250bn (£143bn) of government money into buying shares in struggling US banks - including $25bn each in Citigroup, JP Morgan and the recently-merged Bank of America/Merrill Lynch. The money will come from the bail-out package already approved by Congress. This follows agreement by European leaders on a plan to tackle the banking crisis, saying no big institution will be allowed to fail (said plan spearheaded by British PM Gordon Brown & Chancellor Alistair Darling).
The British government pledged to inject up to £37bn of new capital into Royal Bank of Scotland, LloydsTSB and HBOS. Royal Bank of Scotland (RBS) will raise £20bn - with the government buying £5bn of preference shares and underwriting £15bn of ordinary shares. RBS chief executive Sir Fred Goodwin fell on his sword and quit the firm after the move.
Meanwhile France, Germany, Spain, the Netherlands and Austria have committed themselves to guaranteeing loans between banks and injecting new capital into them. Germany's rescue package is estimated to be worth €500 billion, France: €360 billion, about €200 billion will be coming from the Netherlands and up to €100 billion each from Spain and Austria.
Is this where the World steps back from the abyss and pat Gordon Brown on the back? Well, while this week's rally in the global stock markets is welcome, we should take a closer look at the state of the credit markets instead and see if the banks are now prepared to lend to each other.
So keep those fingers crossed folks, it's still squeaky-bum time...
US unveils $250bn banking rescue
Financial crisis: World round-up
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