New measures to help British banks
20-01-2009
The British government has announced a second package of measures to support the banking system. The long list of measures includes a scheme to offer insurance against banks losing more money from the toxic debt that started the credit crunch. The banks will have to pay for the insurance, but the government says it does not expect to be paid in shares. The Treasury will also be buying up to £50-billion of safer assets from banks, which will include mortgage debt. Under the insurance scheme, banks will agree with the government the amount they expect to lose from particular debt. The Treasury will then sell insurance against about 90 percent of the institutions' additional losses from the debt. The government describes the assets involved as being those "most affected by the current economic conditions." Most of the debt involved is very difficult to value because the market in it has collapsed.
