RBS (NYSE:RBS) and Barclays (NYSE:BCS) share caught some were bumped up to the top of investors’ preference list last Friday after the British government unveiled plans to keep its economy rolling even if the debt situation in the Eurozone continues to deteriorate. The two U.K.-based banks found themselves in the middle of the action at the stock market when Bank of England detailed plans to extend cheap credit to the country’s banking system to ensure that lending activities do not decline.  RBS also gained from reports that the government may reduce its holdings in the 82%-state-owned bank by billions in the coming years.  Shares of RBS rocketed by nearly 10% over trading on Friday, while those of Barclays saw almost a 5% jump to their value.
The U.K. government is falling back on its banking sector in a bid to combat the growing unrest in the country after a series of indicators point towards an economic slowdown. The government has sketched a plan to ward off the imminent impact of collapsing Eurozone economies – something that the Bank of England (BoE) detailed late last week.
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According to the plan, the BoE could pump in well above £100 billion ($160 billion) into the country’s banking system to ensure that banks do not shy away from lending them to businesses. These funds consist of a monthly £5 billion ($8 billion) infusion just to ensure liquidity and an additional £80 billion ($128 billion) of cheap credit to the banks. 
At the same time, the British government also published a report detailing what changes it intends to bring in the country’s banking system based on the ICB’s recommendations.  One of the conclusions drawn from the report is that the government will cuts its stake in RBS and Lloyds by between £6 billion to £9 billion ($9.5 billion to $14.4 billion) in the years to come.Notes: