Barclays gained 15%, Royal Bank of Scotland leapt by over 12%, while Lloyds TSB added more than 10%.
This is in response to the announcement by the US Government that it is temporarily taking over Freddie Mac and Fannie Mae, which between them accounts for almost half of the U.S. home loans market at around 5.4 trillion dollars.
These companies have lost billions of dollars because of the US sub-prime crisis and the global credit crunch. The US government will inject 55 billion pounds into both companies to allow them to honour their existing debts and enable them to keep trading.
This move is aimed at stabilising the US mortgage market and should lead to an increased availability of mortgage financing.
Banks around the world have been highly exposed by these two companies and all will welcome this announcement.
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