...sources said that ministers planned to “keep the banks on the boil” but accepted that they need more help to restore lending levels. Formally, the Treasury plans to focus on state-backed gurantees to
encourage private finance, but a number of interventions are on the table, including further injections of taxpayers’ cash.
Under one option, a “bad bank” would be created to dispose of bad debt
s. The Treasury would take bad loans off the hands of troubled banks, perhaps swapping them for government bonds. The toxic assets, blamed for poisoning the financial system, would be parked in a stat...