Darling announces new government holding firm for bank shares

A new company has been created in order to control the government''s holdings in banks, the chancellor of the exchequer has confirmed.

Speaking to an MPs'' committee yesterday, Alistair Darling said that the new firm, UK Financial Investments Limited, would handle the equity stakes the public money will buy in RBS, HBOS and Lloyds TSB.

Up to £37 billion will be spent on the purchase of these shares.

The chancellor also said that the new firm would also "probably" take control of the government''s holdings in the two banks which have been entirely nationalised thus far since the onset of the credit crunch, Northern Rock and Bradford and Bingley.

Mr Darling added that the bonus culture among Britain''s banks was likely to become a thing of the past this year – and not just in the newly-nationalised financial firms.

"We don''t actually expect many bonuses to be paid at all in the banking sector next year," he commented.