BRITAIN'S Chancellor of the Exchequer, Alistair Darling, is reportedly considering giving banks billions of pounds in return for shares to shore them up in the face of the global credit crunch.
The plan is a middle way between full nationalisation, as with Northern Rock and Bradford & Bingley banks, and further loans, and echoes a similar operation by the Swedish government during its banking crisis in the 1990s, media reports said yesterday.
Mr Darling hinted at the plan in a BBC interview, saying he was prepared to take some "pretty big steps that we wouldn't take in ordinary times".
The leader of the opposition Conservatives, David Cameron, signalled support for the plan, which would offer taxpayers a chance of a return on their investment when banks improved.
Mr Darling was due to make a statement overnight when Parliament resumed after its summer break, in which he was expected to set out Britain's response to Germany's offer of a blanket guarantee to all bank savings.
The announcement by the German Chancellor, Angela Merkel, sparked anger in London, coming the day after she met leaders of France, Britain and Italy in an emergency summit in Paris to discuss the crisis.
They pledged a more co-ordinated approach to prevent the meltdown in US financial markets from engulfing their own economies.
The British Treasury said it was still trying to work out the implications of the German move, which echoed similar guarantees in Ireland and Greece, but opposition politicians said London would have to follow suit.
Britain has promised to increase the level of private savings guaranteed by the Government from £35,000 ($80,000) to £50,000 per person, covering 98 per cent of accounts.
But the leader of the Liberal Democrats, Nick Clegg, warned: "Germany is Europe's economic superpower. Where it leads, others are bound to follow. Ireland's action last week to guarantee all deposits made a common European approach to deposit guarantees necessary. Germany's decision today makes it completely unavoidable."
Mr Darling said the Government was willing to take "pretty big steps that we wouldn't take in ordinary times" to help Britain weather the credit crunch.
He told the BBC that the Government had also provided billions of pounds in support to banks. He said it was "important to take generalised action as well as being ready to take particular action if you get a particular problem with an individual bank".
Europe is struggling to respond to the financial crisis that originated in the United States housing sector.
Britain's new Business Secretary, Peter Mandelson, criticised Ireland and Greece, which have angered other European Union countries by guaranteeing all depositors' savings in their banks.
Mr Mandelson said European countries should act together because their economies were interdependent. "We are all in this together," he told Sky News.
Agence France-Presse,Associated Press
