THE British government may own as much as 30 percent of four of the country's biggest banks as it doles out the 50-billion-pound (US$87 billion) lifeline announced earlier this week, according to analysts at Sanford C. Bernstein.

Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling offered to buy preference shares to help boost capital at Royal Bank of Scotland, Barclays, Lloyds TSB, HBOS and four other lenders in the unprecedented rescue plan. It also guarantees about 250 billion pounds of loans and increases the amount the Bank of England makes available to at least 200 billion pounds.

"The proposed injection leaves the UK banks in a strong solvency position," London-based Bernstein analysts told clients yesterday. "The downside is, of course, that the capital raising implies dilution, with the government potentially taking 20-30 percent of the banks."

Governments around the world are trying to coordinate efforts to reopen the banking system, with United States Treasury Secretary Henry Paulson indicating his US$700 billion rescue plan may include investing in lenders. While banks rose in European trading yesterday, the bailouts have yet to unlock money markets.

Rate cut

The benchmark London interbank offer rate continued to rise, even after central banks announced a coordinated rate cut.

RBS, Britain's third-biggest bank, gained 18 percent to 106.7 pence at 10:20am in London. HBOS, the country's biggest mortgage lender, rose 31 percent to 153 pence, and Lloyds TSB, the UK bank that agreed to buy HBOS, added 8.3 percent. Yesterday's rebound reduced RBS's decline for the week to 43 percent.

Banks worldwide need more capital to offset losses. They posted US$592 billion of writedowns since the credit crisis started last year, more than the US$442.5 billion of new capital they raised, according to data compiled by Bloomberg.

RBS may get as much as 8 billion pounds out of the 20 billion pounds that Bernstein predicts the government will invest in the four lenders. Barclays and HBOS may also need 5 billion pounds each from the government, Bernstein said.

Lloyds TSB may need 2.5 billion pounds. The UK would hold up to 35 percent of RBS, a quarter of Lloyds and HBOS stock, and a fifth of Barclays if the banks need to sell shares to the government.

London-based HSBC, Europe's biggest bank, said it doesn't plan to receive capital from the UK because it has sufficient funding.

Standard Chartered, the London-based bank that makes most of its profit in Asia, and Abbey National, the UK unit of Spain's Banco Santander, also said that they would not be seeking capital from the British government.