Please turn on JavaScript. Media requires JavaScript to play. The UK government has announced a package of measures aimed at rescuing the banking system that makes available £400bn ($692bn) of fresh money. It will initially make extra capital available to eight of the UK's largest banks and building societies in return for preference shares in them. It is "designed to put the British banking system on a sounder footing", said Prime Minister Gordon Brown. Some bank shares rose on the news although the main FTSE 100 index fell. See chart of rescue plan Shares in HBOS, the UK's biggest mortgage lender, ended up 24.5%, and Royal Bank of Scotland was 0.8% higher - trimming earlier gains. Shares in Lloyds TSB fell 7% and Barclays was down 2.4%. The fall on the FTSE 100, which ended down 5.18% at 4,366.69 points, also came despite co-ordinated interest rate cuts from the Bank of England, European Central Bank and Federal Reserve. Taking taxpayers' money will not be a licence to trade as normal

Robert Peston, BBC business editor

Read Robert Peston's blog Treasury statement in full World in turmoil The key points of the plan are: Banks will have to increase their capital by at least £25bn and can borrow from the government to do so.

An additional £25bn in extra capital will be available in exchange for preference shares.

£100bn will be available in short-term loans from the Bank of England, on top of an existing loan facility worth £100bn.

Up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend to each other.

To participate in the scheme banks will have to sign up to an FSA agreement on executive pay and dividends.

Falling shares BBC business editor Robert Peston said that it was understandable that shares had fallen following news of the government's package. "What Gordon Brown and central banks have done today should stave off economic Armageddon - but it's probably too late to save us from months, or even years, of sluggish growth." He said that HBOS shares had risen strongly because it would be more likely to benefit from the plan than its peers. Special company BANKS SIGNED UP Abbey Barclays HBOS HSBC Lloyds TSB Nationwide Building Society Royal Bank of Scotland Standard Chartered

See banking sector shares Parties support plan Latest at a glance Reaction to the plan Much of the current crisis has been caused by the banks' unwillingness to lend to each other, so the government hopes that if those loans can be guaranteed then lending will resume. "This is beginning a process of un-bunging a big problem where banks won't lend to each other for long periods," Mr Darling said. The lenders that have confirmed their participation in aspects of the scheme are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered. The Treasury said that other banks and building societies would be able to apply for inclusion in the plan. Possible profit Preference shares pay a fixed rate of interest instead of a dividend, which has to be paid before other shareholders receive anything, but they do not carry voting rights. Taxpayers may even end up making a profit from the shares, but that is by no means guaranteed. Robert Peston said there would be strings attached for banks that take the government money. "Taking taxpayers' money will not be a licence to trade as normal," he said. Negotiations will take place with each participating institution that will require them to extend normal credit lines to homeowners and small businesses, in addition to rules on executive pay and dividends to other shareholders. 'Stop the panic' It is hoped that the deal will get the money markets going again and assure the future of the banking system. "They've got additional capital now if they want it, they've got an unlimited source of liquidity," said Terry Smith, chief executive of the money brokers, Tullett Prebon. "That certainly should stop the panic in terms of people wondering whether or not the banks are safe." The deal has also been welcomed by the banks. "The government's announcement represents a very real and serious intention on the part of the authorities, following consultation with the banking industry, to bring stability and certainty to the UK banking system," HBOS said in a statement. Barclays, Lloyds TSB and RBS also issued statements welcoming it. HSBC, Nationwide and Standard Chartered also welcomed the plan but said they did not intend to take on any new capital at the moment.

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