US to outline $250 bn bank bailout

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Bangkok, October 14: : The US Treasury is ready to inject $250 billion into US banks, mirroring moves by other leading countries that have boosted confidence in financial markets and sent the Nikkei soaring 13 per cent on Tuesday.

The US Treasury plan to be detailed on Tuesday could put $125 billion into the top nine US banks alone as part of a capital infusion aimed at getting banks to lend to each other again and easing the turmoil in global markets, a source briefed on the matter said.

The move follows pledges of more than 1 trillion euros ($1.36 trillion) by the governments of Britain, Germany, France and other European countries to bolster their banks.

Japan's government also announced a series of steps on Tuesday that could include a law allowing it to inject public funds into regional banks.

Many countries have also moved to reassure savers by guaranteeing bank deposits. South Korean Finance Minister Kang Man-soo was quoted as saying Korea could raise guarantees on deposits and might even guarantee banks' foreign currency debt.

Asian stock markets built on Monday's gains and Japan's Nikkei soared 13 per cent when the Tokyo market reopened after a holiday, although there were some cautious voices.

"The actual amount (of the US plan) is still a little small, and most of the banks will have to raise $10 billion in matching capital. There's some question about whether they'll be able to do this," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities in Tokyo.

RECORD DOW RISE

The jump in Asian stocks followed the biggest one-day gain ever in the Dow Jones industrial average and the S&P 500 index, both up 11 per cent on Monday. Wall Street had its worst week in history last week amid panic over collapsing banks and fears that major economies were heading for recession.

"Sometime last week it seemed like we faced Armageddon, so to have a coordinated plan on stabilizing banks is huge progress," Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said.

Stocks worldwide added more than $1.7 trillion in value on Monday, based on a record 9.3 per cent gain in the MSCI world equity index.

US officials will announce details of the US plan at 8:30 a.m. on Tuesday, the Treasury Department said.