The Government has unveiled details of a £50bn rescue package that will use taxpayers’ money to take stakes in banks.

The deal, which was recently finalised, is in addition to £200bn of liquidity that will be made available by the Bank of England for short-term borrowing. In a further move, the Government is providing temporary guarantees for money that banks borrow from each other in the wholesale markets, with take-up expected to be an additional £250bn.

The eight banks and building societies that have so far confirmed their participation in the capital element of the scheme are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered, but the Treasury has said other banks will be able to apply for inclusion.

The Government will get preference shares in exchange for the funding it provides.

The banks concerned have committed to collectively raising capital by £25bn either through conventional fund-raising or in exchange for the Government taking preference shares in the bank. After raising this initial capital, the Government said it stands ready to provide a further £25bn for institutions at their request.

The Government will also provide a guarantee on the money that banks borrow from each other for a fee in a bid to restore confidence in the wholesale markets. The measure is designed to help institutions meet their refinancing obligations as they fall due and would use unsecured debt instruments of varying terms up to three-years with a guarantee provided by a Government-backed English company.