In a bid to boost the banking sector, Chancellor Alistair Darling has today stated banks will be part-nationalised with £50bn of taxpayers' money.
The rescue plan is an attempt to reassure savers who have their money in high street banks and to encourage banks to lend to one another again. The scheme will cost an average of £1,400-£2,000 per taxpayer.
The main recipients of the cash injection are expected to be Royal Bank of Scotland, Barclays and Lloyds TSB.
The Chancellor has claimed ordinary taxpayers could make a profit once the economic crisis is over, because taxpayers will take a stake in banks through the purchase of preference shares. The holders of these shares are first in line for dividends payouts.
The decision was given the green light at a meeting between the Chancellor, Prime Minister Gordon Brown, Mervyn King the governor of the Bank of England, and Lord Turner of Ecchinswell, the chairman of the Financial Services Authority at Downing Street last night.