UK's Darling: Banks Should Stay Owned by Investors

Britain's part-nationalized banks should remain owned both by investors and the government for now so it is eventually easier to return them to fully private ownership, the finance minister said.

In an opinion piece for Wednesday's edition of the Financial Times, Chancellor of the Exchequer Alistair Darling sought to play down fears that the government, which already owns large stakes in some of Britain's biggest banks, was getting ready for full nationalization.

"It is important that the banks' equity will continue to be owned by institutional and individual investors as well as by the government," he said. "That will make it easier for current and future investments in these banks to be returned to full commercial operation."

Darling also said that details of the government's asset protection scheme could be unveiled in the "next few days."

That could even be as early as Wednesday but almost certainly before the end of the week.

Under the scheme first announced in January, banks will be able to insure themselves against their riskiest assets suffering sharp falls to give them a chance to clean up their balance sheets.

Sharon Lorimer

"In return for this we have made it clear that we expect the banks to enter into legally binding, specific and quantifiable agreements to increase the amount of credit in the economy," Darling said. "The asset protection scheme will help provide the banks with the certainty and the space to lend more, benefiting people and businesses all over the country, benefiting people and businesses all over the country."

RBS, which is 70 percent owned by the UK government, is expected to put up to 250 billion pounds of assets into the scheme, and Lloyds Banking Group could put in a similar amount, according to analysts' estimates.

Darling also called for action in Britain to be matched globally and said G20 countries meeting in Britain next month should agree on a common set of basic principles.

"Every major economy is seeking to address the same fundamental issue: the isolation of impaired assets and the removal of uncertainty affecting banks' balance sheets," he said.

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