Royal Bank of Scotland and Lloyds Banking Group are expected to sign legally binding agreements to lend at least £20bn each more to small businesses and households as the price for insuring at least £500bn of their most troublesome assets with the taxpayer," reports The Guardian .
The banks would also agree to a code of conduct on pay policies and could issue up to £20bn of a newly created class of share to the government to pay for the much-anticipated asset protection scheme.
The precise agreement between the banks and the Treasury is still being hammered out with the aim of making an announcement to coincide with RBS's 2008 figures on Thursday. Sources cautioned that the negotiations were complex and that an agreement may yet not be reached.
The discussion with Lloyds is also thought to include the possibility of some £4bn worth of preference shares, which cost the bank £480m a year in dividend payments, being converted into other share instruments in such a way that the taxpayer's stake does not increase above the current 43%.
The cost of bankruptcy protection on German debt has reached an all-time high on spill-over from the financial crisis in Eastern Europe and mounting concerns about the stability of Germany's banking system, according to The Telegraph.
Credit default swaps measuring risk on five-year sovereign debt touched 90 basis points on Tuesday and looks poised to rise above French debt for the first time.
The spike follows a warning by Deutsche Bank that Germany's economy will contract by 5pc this year as industrial exports collapse at the fastest pace since the Great Depression.
Norbert Walter, the bank's chief economist, said there was a risk of an even deeper slump if the economy fails to stabilize by the summer. "A bigger contraction can't be ruled out," he said.
Moneysupermarket.com, the price comparison website, said today that its earnings fell by 9 per cent last year on weaker demand for financial products, says The Times.
The company, which attracted 120 million visitors to its finance price comparison services in 2008, added that its trading had not picked up in 2009, and has launched a review of the business. Total revenues were up 10 per cent to £178.8 million.
Revenues in insurance rose by 38 per cent to £77.7 million, while those in other financial products fell 10 per cent year-on-year to £68.3 million.
The company's management has been shaken up with a view to reorganising the business. Simon Nixon, founder and former chief executive of the business, has become executive deputy chairman. Executive director Peter Plumb will replace him as chief executive.IFAonline
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation