The UK Government has announced a £400 billion pound aimed at rescuing the banking system.
Initially extra capital has been made available to eight of the UK's largest banks and building societies in return for preference shares in them.
It is "designed to put the British banking system on a sounder footing", said Prime Minister Gordon Brown.
Some bank shares rose on the news although the main FTSE 100 index fell.
Shares in HBOS, the UK's biggest mortgage lender, ended up 24.5%, and Royal Bank of Scotland was 0.8% higher - trimming earlier gains. Shares in Lloyds TSB fell 7% and Barclays was down 2.4%.
The fall on the FTSE 100, which ended down 5.18% at 4,366.69 points, also came despite co-ordinated interest rate cuts from the Bank of England, European Central Bank and Federal Reserve.
The key points of the plan are:
- Banks will have to increase their capital by at least £25bn and can borrow from the government to do so.
- An additional £25bn in extra capital will be available in exchange for preference shares.
- £100bn will be available in short-term loans from the Bank of England, on top of an existing loan facility worth £100bn.
- Up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend to each other.
- To participate in the scheme banks will have to sign up to an FSA agreement on executive pay and dividends.
Banks signed up- Abbey
- Barclays
- HBOS
- HSBC
- Lloyds TSB
- Nationwide Building Society
- Royal Bank of Scotland
- Standard Chartered
