RBS will receive 20 billion pounds from the government, while the merging Lloyds TSB and HBOS is to get 17 billion pounds. The UK government will take a 63 percent stake in RBS and 41 percent in the merged Lloyds TSB and HBOS, indicating that the government will become the major shareholder of the two banks.

The Prime Minister Gordon Brown said Monday at a news conference that the bail-out was "unprecedented but essential for all of us," and would thaw frozen money markets.

He added that the government was not a permanent investor in UK banks and its intention, over time, was to dispose of all the investments it was making as part of this scheme in an orderly way.

Brown believed that Britain was taking the lead in dealing with the crisis. "This is perhaps the first government to do what I believe a large number of governments are going to do over the next few days."

The UK government will buy 5 billion preference shares in RBS and another 15 billion of the bank's ordinary shares if the bank cannot find willing private investors.

HBOS will receive 11.5 billion pounds from taxpayers, consisting of 8.5 billion pounds of ordinary shares and 3 billion preference shares, while Lloyds TSB will get 5.5 billion pounds from the government. The two banks said their merging deal is still going ahead, but the terms had been renegotiated.

According to the revised terms, HBOS shareholders are to get 0.605 Lloyds TSB shares for every HBOS share they have, while the original deal allowed them to have 0.833 Lloyds TSB shares.

As part of the bail-out deal, chief executives and chairmen of both RBS and HBOS will step down, while senior directors should get no cash bonuses this year and their future bonuses are to be paid in the form of shares. This is a move with the aim of encouraging the management team of banks to take a longer-term plan.

However, Barclays said that it has a plan to collect 6.6 billion pounds to boost its balance sheet from private investors instead of government help. The bank also said it would scrap its final dividend payout for 2008, saving about 2 billion pounds.