The UK Government is setting up a new agency to manage its holdings in the banking sector following its announcement yesterday of a potential investment of up to £50bn (€64bn) in the shares of some of the largest British banks amid calls to clarify how it will succeed as a bank shareholder where others have failed.

Treasury officials are currently drawing up plans for the new agency which will manage any stakes the UK government takes in banks including Barclays and Lloyds TSB, in return for giving them billions of pounds in new capital.