Brown, Darling and King meet

Tuesday, 07 October 2008 05:13

Gordon Brown, Alistair Darling and Mervyn King are to meet this evening to discuss the current banking crisis.

The FTSE 100 today made up ground on the record slump experienced yesterday, but banks are under continued pressure - amid the collapse of Landsbanki in Iceland and the uncertainty of its UK Icesave savers, as well as suggestions the banks last night had called in the government to buy into them to provide security and capitalisation.

The prime minister, the chancellor of the exchequer and the governor of the Bank of England, along with Lord Turner, head of the Financial Services Authority (FSA) all met last night with bank heads to discuss the crisis - which has worsen today.

The quartet comes back together this evening to discuss the fast moving events of the day.

Banking chiefs are also expected to hook up into the meeting via a conference call.

Today, bank share prices came under more pressure amid speculation of a UK £50 billion bailout.

Around Europe, Spain has increased its saver protection while Germany's Angela Merkel has criticised the Irish unilateral savings guarantee while herself pledging no German saver would lose out if a bank went bust at the weekend.

As well as saver protection levels and potential recapitalisation plans banks, the Bank of England's interest rate decision, due on Thursday, is also likely to be on the agenda.

While, Mr King guardedly protects the Bank's independence on interest rates, he already under pressure to make an interest rate cut amid the current upheaval.

There are also calls for a half point cut to come, as a quarter point reduction would seem to be ineffective.

However, the Bank's monetary policy committee (MPC) remains dedicated to focusing on the inflation target of two per cent. They are also unlikely to issue a major cut lest they scare the markets.

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