The government is prepared to offer an immediate injection of £25bn into the top eight banks, with a further £25bn available if necessary.

The eight banks are Abbey (which is owned by Santander), Barclays, HBoS, HSBC Bank, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland, and Standard Chartered. HSBC, long regarded as the least vulnerable of the banks, has already issued a statement supporting the policy, but says it has no current plans to take part.

The money is to be Tier 1 capital, so appears to be aimed at rebuilding the banks' balance sheets and capital base rather than providing either liquidity support or a deposit guarantee. To the extent that rebuilding the balance sheets of the stricken banks helps to keep their inverted pyramids the right way up, this seems at the moment like a better use of taxpayers' cash than the American policy of buying dud assets. Divide £50 billion by the eight banks that could be involved and you geta figure averaging just over £6 billion each - not enough to satisfy their medium-term cash requirements but presumably adequate to keep the balance sheets afloat.

Liquidity problems are being addressed by a £200bn injection of cash under the Special Liquidity Scheme, lending sterling for up t othree months (and dollars for a week) in exchange for collateral.

The capital injection, however, is apparently to be in the form of preference shares, which as we currently understand will carry a fixed yield and rank ahead of ordinary equity, but won't carry any share price upside. So it's a gamble for the taxpayer insofar as the pref stock will rank behind other creditors but ahead of ordinary equity.

Individual deals will be struck with each of the banks, so there isn't a single blanket set of terms and conditions - which probably makes sense as some deals will be with banks that are in bigger trouble - and will need stronger covenants - than others.

There are to be limits on executive remuneration. Not sure how that will work but watch this space.

Neither is it clear what, if any, voting rights the government will have - or acquire if things go wrong. We have (so far) seen no mention of any HMG representative sitting on bank boards (which could create an interesting Chinese wall situation if more than one bank were to have a Whitehall mandarin board member - pun not intended), nor any powers the government might have to remove or appoint board members. We suspect that we're back to the old days when a raised eyebrow from the Bank of England was enough to scare bankers into doing what was necessary without any need for outright threats or legalese.

Other banks and building societies can apply to take part in the scheme, including the UK subsidiaries of foreign banks. As noted by a commentator elsewhere on this blog, that might create a problem if a foreign-owned bank goes cap-in-hand bleating that its parent has swept cash out of its UK coffers into the parent piggy bank.

More, as and when.....