Britain contemplating more bank bailouts

LONDON, Oct. 7 (UPI) -- The Royal Bank of Scotland said it was in discussions with the British government to secure capital to keep its balance sheets from further erosion.

The bank's share values fell 20 percent Monday and declined another 40 percent in midday trading Tuesday, erasing $17.5 billion of the bank's worth, The Times of London reported.

Other British banks also found themselves reeling Tuesday. Lloyds TSB shares fell 26 percent, HBOS shares fell 23 percent and Barclays lost 17 percent, The Times said.

The government was working out details to provide $87.8 billion to restore balance in the financial market, The Times said.

The deal would involve the British government purchasing preference shares in the banks, which would make ordinary shareholders investments worthless, The Times said.

Banking troubles in Iceland exacerbated Britain's banking troubles. On Tuesday, Iceland agreed to a $68 billion loan from Russia to help struggling Landsbanki, which has a presence in Britain.