Now, e24.5-bn bailout for East Europe

LONDON: Eastern Europe���s battered banking sector got a lifeline of e24.5 billion, with a group of multilateral financial institutions coming together to lend. The World Bank, the European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB) jointly announced lending to stabilise the region, as western banks with huge exposures in Eastern Europe face rising problems at home.

Ukraine, Hungary and Latvia have also borrowed from the International Monetary Fund. EIB will provide e11 billion for SMEs, the EBRD with provide e6 billion in a mixture of equity and debt, and World Bank will hand our e7.5 billion.

LLOYDS SHOCKER

LLOYDS Banking Group disappointed the markets on Friday as it failed to reach an agreement with the UK government for putting around ��250 billion in toxic assets into the government���s brand new asset protection insurance scheme.

The bank also announced losses of ��10.8 billion from taking over the crumbling HBOS last year in a government-negotiated deal, though it said its Lloyds TSB business made profits of ��807 million. After RBS, Lloyds, which is already about 43% owned by the government, was expected to join the government���s new dumping ground for toxic assets.

CONTROL CODES

Amid a national row over pension payments to the former head of Royal Bank of Scotland, the UK Financial Services Authority (FSA) has issued a code of practice for bank remunerations, which stops short of setting caps on bankers��� salaries.

The FSA, which has had to admit that it did not really supervise the financial sectors strategy in keeping with the ���light touch��� regulation, has put out a code of practice linking bonuses with profits, not revenues. It also recommends higher fixed salaries, greater emphasis on risk management, and holding back bonuses until they are proved to be based on business sense.

The FSA has also indicated that more stringent norms are in the pipeline that will put curbs on proprietary trading by banks, as part of a major overhaul of the regulatory structure. FSA rules will apply to all financial firms in UK, including overseas arms.