Bank bosses go head to head with PM

Bosses of the UK’s biggest banks will today hold talks with the Prime Minister in a bid to devise urgent solutions to the credit squeeze.

Gordon Brown is set to meet the chief executives of Barclays, HBOS, HSBC and Royal Bank of Scotland, along with senior investment bankers from the city.

It is believed that the banks will call on the PM to unblock the money markets to alleviate the effect on the economy of the credit squeeze.

Pivotal to the talks will be moves to revive demand for mortgage-backed securities and attempts to reduce inter-bank lending rates.

It is believed bank executives want the Bank of England to follow other central banks, such as the US Federal Reserve, in accepting mortgage-backed securities as collateral in exchange for government-backed bonds.

More extreme moves such as the central bank buying up mortgage-backed securities, then holding onto them until demand starts up again, will also be discussed.