Royal Bank of Scotland, Lloyds TSB and HBOS will have a total of £37bn injected into them. In return for the investment, the government will get a say in how the banks are run, including controls over the bonuses paid to management.

While the broad outlines some of the deals represented a concerted response to plummeting stock markets and frozen credit markets, the leading European economies also embraced some individual steps, underlining the differences of approach they have sought to bury in the face of the worst financial crisis of the post-war era.

On Sunday, European leaders agreed to act at a national level from what officials called a “toolbox” of measures fitting their indivual requirements.

“The time of everyone moving alone is over,” President Nicolas Sarkozy of France told a news conference in Paris. The sweeping measures began early Monday as Britain pledged to spend billions in taxpayer money to shore up battered banks. The British Treasury said the initial steps could be worth $64 billion to three banks. In effect, the moves mean the partial nationalization of those institutions — the Royal Bank of Scotland, HBOS and Lloyds TSB.

RBS is to raise £20bn with a further £17bn to be put into HBOS and Lloyds TSB. Barclays intends to raise £6.5bn without government help.

In a separate announcement several hours later, Chancellor Angela Merkel announced a rescue package including more than $500 billion in loan guarantees to stimulate lending between banks and $108 billion to bolster the banking system. She called the German package “the first cornerstone for a new economic structure.”

The Spanish government also agreed a package worth around $130 billion. Italy set aside $27 billion to help banks.

In Paris, Mr. Sarkozy said France would provide up to $435 billion in loan guarantees and as much as $52 billion to take stakes in banks if needed. After drastic falls last week, markets in Asia and Europe rose dramatically. In New York, the Dow Jones opened sharply higher.

Speaking about the British measures, Prime Minister Gordon Brown told a news conference in London: “The action we are taking is unprecedented but essential for all of us.” Taxpayers will own about 60% of RBS and 40% of the merged Lloyds TSB and HBOS and executives at the three firms will see cash bonuses limited or forbidden.
Chancellor Alistair Darling told MPs that the rescue package contained: "essential steps in helping the people and businesses of this country and supporting the economy as a whole". Prime Minister Gordon Brown said the bail-out was: "unprecedented but essential for all of us", and would thaw frozen money markets.

In Washington, Neel T. Kashkari, the assistant Treasury secretary for financial stability who will oversee of the $700 billion bailout, offered an explanationMonday morning of how the government would proceed with its efforts to restore the credit markets and confidence in the financial system.

“Achieving this goal will require multiple tools to help financial institutions remove illiquid assets from their balance sheets, and attract both private and public capital,” Mr. Kashkari said. “Our toolkit is being designed to help financial institutions of all sizes so they can grow stronger and provide crucial funding to our economy.”

Mr. Kashkari then explained that the government had set up teams to determine the best ways to buy mortgage-backed securities, acquire equity stakes in banks, identify home loans that need to be purchased, insure trouble assets, preserve homeownership, deal with the executive compensation at banks that receive capital injections and assure compliance with regulatory laws.

In UK Mr Brown insisted the investments were assets and, "not just money being pumped in", adding the government intended to sell the investments at some point.
The measures needed to be accompanied by international banking system reforms, he added. "We must now put in place new structures and new rules for the future. This cannot simply be a short-term rescue to paper over the cracks. Only a surgical approach that gets to the root of the problem will now work to ensure the problems do not return."