Page last updated at 11:46 GMT, Wednesday, 8 October 2008 12:46 UK

First minister welcomes bank plan

Alex Salmond
Mr Salmond said "more assurances" for depositors were needed

First Minister Alex Salmond has welcomed the 50bn rescue plan for UK banks as a "very substantial" set of measures.

But Mr Salmond said more action was needed and he called for "more assurance" for depositors.

He also criticised "leaks and rumours" surrounding a fall in the Royal Bank of Scotland's share price on Tuesday.

The UK Government is to take shares in a number of banks. A 0.5% cut in interest rates has also been announced.

Speaking to BBC Radio's Good Morning Scotland programme, Mr Salmond said: "For the first time we've seen action to open up medium-term funding which has been one of the missing links in the previous attempts to help the situation. So that's welcome."

This is a substantial package and addresses one of the missing links in previous attempts to stabilise the system
Alex Salmond
First Minister

But Mr Salmond said more action was still needed to combat the credit crunch. Ahead of the news of an interest rate cut by the Bank of England he had called for a "decisive cut".

He added: "I still think more assurance will be needed for depositors.

"But let's accentuate the positive shall we - this is a substantial package and addresses one of the missing links in previous attempts to stabilise the system."

So far eight UK banks and building societies - including the Royal Bank of Scotland, Barclays, HBOS, Lloyds TSB and Nationwide - have signed up to the scheme.

'Direct negotiations'

Mr Salmond said speculation surrounding the future of Royal Bank of Scotland (RBS) chief executive Fred Goodwin was "not helpful" while the stabilisation package was being announced.

"The fact that it [RBS] came under such pressure yesterday is an indication of the very peculiar, unusual circumstances of leaks and rumours that were circulating around yesterday," he said.

"I'm sure everybody who was in that process would have much preferred that hadn't happened when they look back - but it does show any institution can come under pressure."

A body representing Scotland's financial services industry has welcomed the package to address "an increasingly volatile situation".

Scottish Financial Enterprise chief Owen Kelly said: "It was vital that the government worked with the industry to produce this package, which should offer greater stability for the institutions and, importantly, increased confidence across the markets."

The Scottish Chambers of Commerce also welcomed what it called "decisive action" by the Government.

Commenting on the rescue package, Scottish Lib Dem leader Tavish Scott urged the government to help keep HBOS as an independent bank.

He added: "This is a massive package of money for banks. Market and banking circumstances have changed enormously since the proposed Lloyds/HBOS merger was announced.

"The government are now in direct negotiations with banks so they could make this happen.

"Keeping HBOS as an independent bank while strengthening RBS through this package would be positive economic news for Scotland. I urge the government to make this happen."

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SEE ALSO
Rescue plan for UK banks unveiled
08 Oct 08 |  Business
Salmond to lead bank presentation
23 Sep 08 |  Scotland
HBOS chief defends takeover deal
22 Sep 08 |  Scotland
Lloyds move 'only show in town'
21 Sep 08 |  Scotland
Former rival mourns bank takeover
21 Sep 08 |  Scotland
Bank buy-out idea floated by MSP
21 Sep 08 |  Scotland
Q&A: Lloyds TSB and HBOS
18 Sep 08 |  Business
Lloyds TSB seals 12bn HBOS deal
17 Sep 08 |  Business
Salmond attacks financial 'spivs'
17 Sep 08 |  Edinburgh, East and Fife

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