Investors Give Thumbs Down To Lloyds Asset Protection Deal

City investors have given the thumbs down to a deal that will see the UK government protect around 260 billion ($360 billion) of toxic assets belonging to Lloyds Banking Group (LBG) in return for a 65% share in the company.

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City investors have given the thumbs-down to a deal that will see the UK government protect around 260 billion ($360 billion) of toxic assets belonging to Lloyds Banking Group (LBG) in return for a 65% share in the company.

According to the Guardian, shares in LBG – which was created in January by the merger of Lloyds TSB and HBOS – fell by 15% to 36 pence each in early trading because investors believe the bank is paying more pro-rata than other banks in the same scheme.

Under the bank’s agreement with the Treasury, it will pay around 15.6 billion in fees – mostly non-voting B shares – to protect itself against losses over the first ten per cent stemming from the toxic loans.

Lloyds will also be required to boost its residential and business lending by 28 billion over the next two years.

The agreement will give UK taxpayers’ a 65% stake in the bank, which could eventually rise as high as 77%.

D.C.

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