UK Banks Could Benefit From US Bailout

The US Treasury’s 700 billion dollar plan to buy up bad loans that are clogging the US financial system and threatening the economy could also benefit UK Banks. The plan will give the US Treasury authority to purchase bad mortgage-related loans from US financial institutions for the next two years. The debts would then be held until they can be sold off in the future.

The unveiling of the plan boosted financial markets around the world, reversing some of the substantial losses seen during what had been one of the most turbulent weeks in financial history. London’s FTSE 100 Index posted its biggest ever one day gain of nearly 9%, with banks like the Royal Bank of Scotland (RBS), Barclays and Lloyds TSB jumping more than 20% in value.

The US Treasury said that it was looking to extend the bail-out to non-US companies, if it proved necessary to stabilise markets. RBS has lost close to £6 billion pounds worth of credit crunch-related assets this year, with Barclays suffering losses of £2 billion and HBOS £1.1 billion.

The White House hopes to have the plan ratified by Congress by the time markets open on Monday.