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The British Treasury may appoint its own representatives to the boards of the country’s biggest banks as it begins buying stakes in them over the next few weeks, a government official said.

Policy-makers need to consider how to protect taxpayers’ interests when taking significant stakes in lenders, the official said.

Governments in Europe and North America are preparing plans to buy stakes in banks to alleviate the credit freeze threatening to tip the world into a recession. UK’s plan contrasts with the United States, where T Secretary Henry Paulson said two days ago that American authorities would have non-voting shares.

The UK government last week said it would invest at least £50 billion (Bt1.73 trillion) to recapitalise Royal Bank of Scotland Group, Barclays and at least six others.

Britain’s programme may be big enough to give the government a controlling stake in some lenders.

RBS, with a market capitalisation of £11.9 billion, will seek about £10 billion from investors and the government, a source said. Barclays’s market capitalisation is £17.4 billion.

UK Treasury officials have been working with the lenders on the programme and will today begin outlining details of a related plan to guarantee as much as £250 billion of interbank loans though an insurance system.

Once it has unveiled how it will price the insurance policies, regulators will begin talking to banks about capital injections and what share of their business is nationalised.

“We are working hard toward implementation,” Chancellor of the Exchequer Alistair Darling said. “We will be doing something pretty quickly. It is essential we take action here in the UK.”

BLOOMBERG
Washington