WORLD> Europe
Press gloomy on bank rescue
(Agencies)
Updated: 2009-01-20 16:32

LONDON – The British media balked at the cost of another rescue package for banks Tuesday, but acknowledged it was necessary to get credit flowing and predicted nationalisation would be the next step.

The package unveiled Monday, which included an insurance scheme to protect banks from so-called toxic assets, "is intelligent, yet leaves us a long way short of anything approaching normal service," the Guardian said.

"If this strategy does not work, ministers may need to move to outright nationalisation," the newspaper added.

Majority government-owned Royal Bank of Scotland is most likely to face this fate, following the 66.57 percent crash in its shares Monday after it forecast an annual loss of up to 28 billion pounds -- a British record.

The Times welcomed Prime Minister Gordon Brown's efforts to get banks struggling with the credit crunch to begin lending again, but expressed concern at the "staggering commitment of taxpayer funds."

To prevent any further injection of public money into RBS without any noticeable effect, "it looks increasingly likely that it (the government) will have to take the logical next step of wholesale nationalisation without delay."

The Independent also lamented "another colossal slice of taxpayer support being sent in the direction of the very institutions whose reckless lending precipitated this disaster in the first place. But we must be realistic."

The Daily Mail expressed outrage at RBS former chief executive Fred Goodwin for his management of the bank, but it also urged traders to "stop talking down bank shares and give this bail-out a chance. It may be the last one we have."

This line was echoed in the Sun, which said in an editorial: "We as a country are in danger of allowing ourselves to be talked into a ruinous economic slump. The recession is bad but Britain isn't bankrupt."