Alistair Darling, the UK finance minister , spoke to senior executives of Britain's largest banks yesterday to outline the plan that will see the government insure banks against potential losses on risky loans in return for firm commitments to increase lending to credit-starved consumers and businesses.
Amid fears about a public backlash against billions more of taxpayers' money being committed to help the financial sector, ministers are expected to express their anger and frustration at the banks' reluctance to increase their lending despite benefiting from the government's £400bn ($592bn) bail-out in October.
As part of a series of measures, the government is expected to announce it is converting £5bn of preference shares issued by Royal Bank of Scotland into ordinary shares, increasing the state's shareholding from about 58 per cent to 68 per cent.