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Is the Royal Bank of Scotland set to be nationalised?

There are fears this evening that the UK government will need to nationalise the Royal Bank of Scotland after the share price collapse. Despite the government increasing its stake to 70% and promising to keep the business afloat via various guarantees it would appear that UK investors are not willing to give the company the benefit of the doubt. Despite receiving £32 billion of taxpayer's money only three months ago the company is now valued at a paltry £4.5 billion. This is a far cry from the £75 billion value placed on the business just two years ago.

Those who thought that the UK banking crisis was over with the announcement of today's second rescue package may need to think again. If the Royal Bank of Scotland is nationalised, as seems highly likely, investors will move on to the other banks in the UK and their share prices are likely to come under pressure. Gordon Brown's promises to keep the UK banking sector afloat is this evening ringing hollow and there is serious concern that the sector is on the brink of collapse.

Having already placed his reputation on the line it appears that Gordon Brown is in need of a miracle.

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