Major British banks are likely to announce their plans to recapitalise early tomorrow, a person familiar with the matter said, a move which could see the government take multi-billion pound stakes in several lenders.
Banks were in crisis talks with the government and regulators today to determine how much capital each needs from the £50 billion ($86 billion) offered by Britain last week.
An announcement is expected before the market opens on Monday but details are still being fine-tuned, said the source, who declined to be identified.
The Sunday Timessaid Royal Bank of Scotland, HBOS, Lloyds TSB and Barclays could ask for a combined £35 billion lifeline.
RBS may need at least £10 billion, HBOS over £5 billion and Lloyds and Barclays more than £3 billion apiece, according to industry sources and analysts' estimates.
That could result in the government becoming the biggest shareholder - and even a majority investor - in RBS and HBOS.
Earlier this year RBS shareholders had said chief executive Fred Goodwin he would need to step down if the bank sought to raise more cash.
The government could take seats on the boards of banks, a government source said yesterday.
Lloyds, RBS, HBOS and Barclays all declined to comment.
British Finance Minister Alistair Darling, attending a G7 finance ministers' meeting in Washington, said on Saturday the government was to give more details early this week about its already announced £400 billion banking rescue plan.
The Sunday Timessaid the scale of the fund-raising could lead to trading at the London Stock Exchange being suspended to give the market time to digest the impact.
The LSE downplayed that prospect, however. "My information is that the market will open on Monday," a spokesman said.
RBS, which has seen its market value fall to below £12 billion, is to ask ministers to underwrite a £15 billion cash call, the Sunday Times said.
HBOS, Britain's biggest provider of mortgages, was seeking up to £10 billion, Lloyds wanted £7 billion and Barclays needed £3 billion, the newspaper said.
Barclays, Britain's second biggest bank, has said it is considering raising capital privately and is expected to try and raise funds from existing shareholders to limit any funds provided by the government.
Lloyds is in the process of buying HBOS and the fundraising could see Lloyds renegotiate the terms of the deal, although both sides were still keen for the merger to go ahead, the
Sunday Timessaid.
Reuters