US banks may help raise rail billions

Further train strikes are expected across the region

Big US banks are talking to the Department of Transport about raising billions of pounds to fund an expansion programme for Britain's tottering railway network.

Two Sunday papers have highlighted the deal, which they say will help the government overcome the distrust it may now face from financiers after the decision last eyar to force Railtrack into administration.

The Sunday Times and the Sunday Telegraph agree that the main protagonists are US investment bank Morgan Stanley and lease-finance specialists Babcock & Brown.

The idea is to raise billions through issuing bonds secured against the income of the Strategic Rail Authority.

The papers also agree that the government is running out of options for raising the more than £30bn it says it needs from the private sector in the next ten years to revitalise the creaking rail infrastructure.

The German bank WestLB had intended to bid for what used to be Railtrack but has now pulled out, preferring instead to help refinance Network Rail, the vehicle being built by the government to take over the network.

But they differ on the amount the US groups are planning to raise.

While the Sunday Times thinks £10bn is the target, the Sunday Telegraph says £20bn is the true figure.