The Government says it has agreed to bail out three high street banks – RBS, HBOS and Lloyds TSB – to the tune of £37bn.

The announcement came after Royal Bank of Scotland said it would be raising £20bn of new capital including £5bn in cash from the Government.

As part of the deal the bank’s under-fire chief executive Sir Fred Goodwin is to stand down.

Lloyds TSB is also to raise £5.5bn of new capital, and is also revising the terms of its takever of rival HBOS.

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Barclays has confirmed it plans to raise more than £6.5bn of extra capital from investors to strengthen its balance sheet.

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The group also said it will not be paying a £2bn dividend for the 2008 financial year.

The huge bail-out will leave foreign-owned HSBC as the UK’s only major, fully independent High Street bank.

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