"There is a great deal of uncer tainty. There seems to be some concern doing the rounds that the group will be totally nationalized sometime in the near future," said Keith Bowman, analyst at Hargreaves Lansdown stockbrokers.
Prime Minister Gordon Brown said yesterday the government has increased its stake in RBS to almost 70 percent, but declined to say whether he believed the bank will eventually be fully nationalized. The government took a stake under a first round of bailouts last year.
Brown scolded RBS for what he called irresponsible risk-taking on mortgage-related securities in the United States and the expensive takeover of Dutch bank ABN Amro.
The bank said it expected to mark down the value of past acquisitions including the ABN Amro deal by $21.6 billion to $28.7 billion, plus posting other losses up to $11.5 billion after a dismal fourth quarter.
In revealing the new rescue package, Brown said the government would offer to insure banks against default on toxic loans in exchange for a fee and legally binding commitments to make credit more available to businesses and home buyers.
Brown's plan will also see about $74 billion set aside to create a special fund for the Bank of England to buy high quality loans and other assets directly from banks. That plan is also aimed at bringing down borrowing costs.
The European Commission said yesterday the bank-rescue programs, along with falling tax revenue, would push Britain further into debt.
