UK chancellor Alistair Darling was on Sunday considering a taxpayer-funded recapitalisation of Britain’s banks, amid signs of cross-party and central bank support for an effective part-nationalisation of the sector. Darling said Sunday he was examining “some pretty big steps which we would not take in ordinary times”. These include a contingency plan for an injection of public funds into ailing banks. Although no decision has been taken to activate any contingency plan, Treasury officials would not rule out a voluntary bank recapitalisation scheme. Opposition leader David Cameron, writing in Monday’s FT, signalled Conservative support for “drastic capital measures” which would see the taxpayer offering to take an equity stake in banks. Mervyn King, governor of the Bank of England, who met Cameron last week, is also thought to favour a recapitalisation plan to supplement the Bank’s own liquidity-boosting operations. The chancellor will give a statement to MPs on Monday on the financial turmoil, as the Commons returns after its summer break.
