Under the terms of the rescue package, the government is:

* extending the drawdown window for new debt under the Government’s Credit Guarantee Scheme (CGS) which is designed to reduce the risks on lending between banks;

* establishing a new facility for asset backed securities;

* extending the maturity date for the Bank of England’s Discount Window Facility which provides liquidity to the banking sector by allowing them to swap less liquid assets;

* establishing a new Bank of England facility for purchasing high quality assets;

* offering capital and asset protection scheme for banks, with proposals for this to be co-ordinated internationally; and

* clarifying the regulatory approach to capital requirements, through an announcement by the Financial Services Authority (FSA).

The government has also converted the Treasury’s preference share investment in RBS to ordinary shares. The Treasury says the move aims to support stability in the financial system, ensure continued protection for ordinary savers, depositors, businesses and borrowers, and maintain a safeguard of the interests of the taxpayer.

Meanwhile, the Times reports that Gordon Brown is furious with RBS as £20bn of its record £28bn loss is related to the purchase of ABN Amro.

David Breger, a partner at HW Fisher chartered accountants, says the latest rescue package is good news for businesses, homeowners and borrowers. “Access to credit is crucial if we are to prevent the downturn intensifying. The question, as ever, is will the banks pay attention to it, and if they do, how long before companies and consumers begin to benefit? Time is everything at the moment,” he says.

"I’ve heard January 19th is the most depressing day of the year, but hopefully today will go down as the day lending reignites, offering a glimmer of hope to business and families."

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