Britain announced a second rescue plan for the country's ailing banks on Monday, hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets they already hold. Stock investors, however, were spooked by fears that the second bank rescue plan in three months was a step toward full nationalization of one or more banks. Fears focused on the Royal Bank of Scotland, which disclosed that it is likely to report a record full-year loss - its shares closed down 67 percent. "There is a great deal of uncertainty," said Keith Bowman, analyst at Hargreaves Lansdown stockbrokers. "There seems to be some concern doing the rounds that the group will be totally nationalized sometime in the near future." RBS said its losses for the full year could be as much as Â£28 billion, which would be the biggest loss ever by a British corporation. Prime Minister Gordon Brown said Monday that the government has increased its stake in RBS to almost 70%, but declined to say whether he believed the bank will eventually be fully nationalized. The government took a stake under a first round of bailouts late last year. Announcing the new rescue package, Brown said the government would offer to insure banks against default on toxic loans in exchange in return for a fee and legally binding commitments to make credit more available to British businesses and home buyers. Brown's plan will also see Â£50b. set aside to create a special fund for the Bank of England to buy high-quality loans and other assets directly from banks. That plan is also aimed at bringing down borrowing costs. The Treasury said precise details of the asset-purchase program would be finalized later this month. Chancellor of the Exchequer Alistair Darling and Brown acknowledged that October's pledge of Â£37b. to bail out Britain's banks hadn't done enough to encourage them to resume normal lending volume. "Good businesses must have access to credit, jobs should not be lost needlessly," Brown told reporters at his Downing Street office. He said stimulating lending was vital to spark Britain's economy and to limit job losses as Britain tackles a recession prompted by the global downturn. The Treasury said the government would offer to insure banks against losses on about 90% of specific shaky loans. The plan would require banks to identify their riskiest assets, which could be insured with government backing. Neither Brown nor Darling could say how much the plan would cost taxpayers. The problems facing the banking sector were stoked last week by Citigroup Inc.'s announcement of a massive $8.3b. fourth-quarter loss. Bank of America Corp. also revealed a $2.4b. quarterly loss and said last week it would get an additional $20b. in support from the US government's emergency bailout fund, plus guarantees against losses on up to $118b. in troubled assets. The $20b. will come from the government's $700b. rescue fund, called the Troubled Asset Relief Program, or TARP. The European Commission said Monday the bank-rescue programs, along with falling tax revenue, would push Britain further into debt. It predicted that Britain's deficit - the difference between annual spending and revenue - would rise from 2.8% of gross domestic product in the financial year that ended in April 2008 to 5.7% in the current financial year. The Commission predicted Britain's deficit would reach 9.5% in 2009-2010. Overall debt would likely soar to nearly 72% of gross domestic product by fiscal year 2010-2011, way above the government target of 40% or less, the EU executive said.