UK government may raise Lloyds stake to 77 per cent
07 Mar 2009
The British government has entered into a deal with banking giant Lloyds Banking Group that could increase the government's stake to 65 per cent, from 43 per cent after previous bailouts. However, its stake could go up to 77 per cent if 'B' shares are converted, the bank said on Saturday.
The Treasury has effectively underwritten 260 billion pounds of the bank's potentially toxic assets in return for increasing its stake in the company.
The plan will limit the losses the bank could suffer if the economy continues to deteriorate and bad debt shoots up further, Eric Daniels, Lloyds chief executive, said.
"Our significantly enhanced capital position will ensure that the group can weather the severest of economic downturns and emerge strongly when the economy recovers," Daniels noted.
Earlier, the government had infused 17 billion pounds into Lloyds following its rescue takeover of stricken HBOS, giving it stake of 43 per cent.
Treasury minister Stephen Timms said the deal provided certainty for the bank.