As debate rages over a possible $700bn (£378bn) package to bail out the US economy, there is a chance that UK high street banks could be eligible for a quarter of the rescue fund, courtesy of the American taxpayer.
Many don't want to prop up US banks - so what if the UK sucks up funds?
Britain's five leading high street banks hold £95bn of distressed assets on their books that could qualify for the rescue package, with HSBC - which today announced job losses of over 500 in the UK - the main beneficiary.
Under the terms of an agreement reportedly reached 'in principle' last night, lenders on this side of the Atlantic would be able to use the facility - a prospect likely to infuriate US taxpayers already baulking at the idea of hauling up its own fallen giants.
This said, the scope and detail of the plan hangs very much in the balance.
President Bush's pleas to put rivalry aside have only served to pour high octane on the heated debate over the proposal.
How Much Could They Sell To The Fed?
HSBC: £45bn
Barclays: £17.4bn
RBS: £16.2bn
HBOS: £13.3bn
Lloyds TSB: £3.4bn
Last night there were big hints that an outline had been given the thumbs up by all parties, only for it to emerge that the political choreography of Barack Obama and John McCain's campaigns will keep the quibbling going for at least another day.
Neither side wants to be seen to kill the deal, but nor do they want to be seen to be bailing out the bad bankers, or their greedy (but now wounded) shareholders.
The concessions - from capping executive pay to taking a stake in the banks which benefit from the bail-out - are beginning to run to many pages. But that is democracy.
And then what of the British question?
The idea that overseas banks which had been exposed to the mortgage crisis could dip into the rescue fund was slightly lost among the emergency rhetoric.
HSBC 's exposure to US toxic debt ran to £45bn, while Barclays, RBS, HBOS and Lloyds TSB also have smaller amounts of structured mortgage debt and other soured assets.
Battle For Bank Bail-Out
All in all, the damage incurred by the firms would account for a sizeable chunk of the total package.
But it is not clear exactly how they would qualify and how much they would be able to sell their distressed assets for.
It may be that some of the banks will find the price offered by the fund is much less than they are prepared to take.
Either way it is likely to add more controversy to the whole process, as US politicians and taxpayers flinch at the thought of not just bailing out their own badly behaved bankers, but even worse, the limeys in London.
source: http://news.sky.com/skynews/Home/Business/US-Financial-Rescue-Plan-Will-UK-Banks-Benefit-From-Bail-Out-Fund-Asks-Michael-Wils/Article/200809415107747?lpos=Business_Article_Body_Copy_Region_0=ARTICLE_15107747_US_Financial_Rescue_Plan%3A_Will_UK_Banks_Benefit_From_Bail-Out_Fund%2C_Asks_Michael_Wils
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