The British government will inject £37bn of funding into Royal Bank of Scotland, Lloyds and HBOS in an attempt to prop up the country’s banking sector.
It has agreed to buy around £5bn of preference shares in Royal Bank of Scotland and underwrite a share sale for a further £15bn. £17bn is being pumped into HBOS and Lloyds TSB upon completion of their merger and Barclays is to raise £6bn through private capital raising.
RBS also confirmed that chief executive Fred Goodwin and chairman Tom McKillop will be leaving the company.
Banking stocks were amongst the big risers with Royal Bank of Scotland and Barclays both up 10 per cent to 209p and 230p per share respectively.