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Banks 'will be part-nationalised'

The government is to part-nationalise large UK banks, in a bid to loosen up the money markets and avert a severe economic downturn.Alistair Darling announced the move this morning - saying that preferential stakes would be bought in eight firms.These are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered.It is hoped that this plan will lead to greater confidence in the sector - leading banks to start lending to each other again.The market response to the scheme has been negative - the FTSE 100 was down seven per cent just after the opening this morning, before rebounding.Analysts' opinions have been similarly mixed."[The banks have] got additional capital now if they want it, they've got an unlimited source of liquidity," Terry Smith, chief executive at broker Tullett Prebon, told the BBC.However, Matt Buckland at CMC markets told the Press Association that the plan's effect would be "minimal".He added: "As we've seen in the US, government intervention isn't freeing up credit markets and that is the key point - if it's difficult for companies and individuals to get hold of credit, it's going to be difficult to stimulate growth and break out of this recessionary mindset."

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