Thursday, 16 October 2008 01:00 | and posted in News
On Monday of this week Prime Minister Gordon Brown bought shares in three of the country's most troubled banks with £37 billion of taxpayers' money. This move kick-started a £1.9 trillion global bail-out as leaders in Germany, France, Spain, Portugal, Austria, Italy and Holland and then later, America, all followed Brown's blueprint.
This new move by the Government saw them acquire a 60 per cent stake in RBS and 44 per cent of both Lloyds TSB and HBOS and is part of the wider £500billion package that was unveiled last week (read that story here). This buy-out came with several conditions including a ban on cash bonuses for boardroom staff of these banks. Last year the banking sector paid out £16.9billion worth of cash bonuses to CEO's and boardroom staff.
Analysts believe that in the long term this deal could be a good one for the government as if shares return to the level they were a year ago, the treasury could reap back £277billion.
The total cost of rescuing the western economic banking system is now close to £2 trillion - about £288 for every person on the planet. This is also equivalent to:
- 10,000 times the total raised by Band Aid and Live Aid
- 36 times the aid sent by the richest nations to the poorest each year
- 190 times the GDP of Ethiopa.
