UK Nationalizes Royal Bank of Scotland (RBS)

The UK government has nationalized the Royal Bank of Scotland (RBS) late Sunday night, by injecting about $35 billion of taxpayer money into the failing bank.

The Government is also expected to take over HBOS soon as well, as state ownership in the British financial sector becomes the most far-reaching since the World War II. Initially, HBOS was going to have been taken over by Lloyds TSB, but that deal all but collapsed on Saturday.

In addition to the RBS and HBOS purchases, the government will also guarantee interbank lending. The scale of these recent nationalizations eclipses the bailouts of Northern Rock and Bradford & Bingley earlier this year, and also represents a huge risk for the taxpayer.

Fred Goodwin, CEO of RBS is expected to step down on Monday, and Andy Hornby, CEO of HBOS, will likely resign as well.