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| Version 9 | Version 10 |
|---|---|
| £250bn Lloyds asset deal on cards | £250bn Lloyds asset deal on cards |
| (about 10 hours later) | |
| Lloyds Banking Group is close to a deal with the government for a £258bn asset insurance scheme, the BBC has learned. | Lloyds Banking Group is close to a deal with the government for a £258bn asset insurance scheme, the BBC has learned. |
| The agreement could increase the taxpayer's share in the bank from its current level of 43% to as much as 70%, according to reports. | The agreement could increase the taxpayer's share in the bank from its current level of 43% to as much as 70%, according to reports. |
| Lloyds shares closed up 4.2%. However both the government and Lloyds said nothing had been agreed. | |
| Under the plan the government would insure up to £258bn of assets, and would get non-voting shares in return. | Under the plan the government would insure up to £258bn of assets, and would get non-voting shares in return. |
| It could also mean the bank swapping some of the government's existing non-voting preference shares, on which the bank currently pays 12% interest, for ordinary shares. | It could also mean the bank swapping some of the government's existing non-voting preference shares, on which the bank currently pays 12% interest, for ordinary shares. |
| It is believed the interest on these shares costs Lloyds about £480m a year. | It is believed the interest on these shares costs Lloyds about £480m a year. |
| ASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debtsEssentially an insurance schemeBanks pay a fee to take partBanks are liable for initial losses, similar to paying the excess on an insurance claim | ASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debtsEssentially an insurance schemeBanks pay a fee to take partBanks are liable for initial losses, similar to paying the excess on an insurance claim |
| The swapping of preference shares for ordinary shares would be seen as important for Lloyds' cashflow. | The swapping of preference shares for ordinary shares would be seen as important for Lloyds' cashflow. |
| BBC political correspondent Reeta Chakrabarti said an agreement between Lloyds and the government should have been reached a week ago, but both sides confirmed discussions were still ongoing. | BBC political correspondent Reeta Chakrabarti said an agreement between Lloyds and the government should have been reached a week ago, but both sides confirmed discussions were still ongoing. |
| Rumours that a deal could be announced on Friday were being played down, she added. | Rumours that a deal could be announced on Friday were being played down, she added. |
| A spokesman for Lloyds Banking Group said conversations had not yet concluded and there was still "a good deal of detail to be worked through". | A spokesman for Lloyds Banking Group said conversations had not yet concluded and there was still "a good deal of detail to be worked through". |
| A Treasury spokesman said: "Discussions are ongoing. A deal will be announced at the conclusion of those discussions." | A Treasury spokesman said: "Discussions are ongoing. A deal will be announced at the conclusion of those discussions." |
| Liberal Democrat Treasury spokesman Vince Cable has described full nationalisation of Lloyds as "inevitable" and has called on the government to bring the whole banking sector under public control. | Liberal Democrat Treasury spokesman Vince Cable has described full nationalisation of Lloyds as "inevitable" and has called on the government to bring the whole banking sector under public control. |
| Restore confidence | Restore confidence |
| The deal is part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses. | The deal is part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses. |
| It was put forward by Chancellor Alistair Darling in a bid to restore confidence in the banking sector. | It was put forward by Chancellor Alistair Darling in a bid to restore confidence in the banking sector. |
| RBS was the first bank to sign up, announcing last month that it would ask the government to insure £325bn worth of so-called toxic assets, which are difficult to value and currently can not be sold. | RBS was the first bank to sign up, announcing last month that it would ask the government to insure £325bn worth of so-called toxic assets, which are difficult to value and currently can not be sold. |
| BBC political correspondent Carole Walker said Vince Cable was not alone in believing full nationalisation would restore confidence in the banks more quickly. | BBC political correspondent Carole Walker said Vince Cable was not alone in believing full nationalisation would restore confidence in the banks more quickly. |
| "There are a number of people in Westminster who believe we are getting closer and closer to full nationalisation," she said. | "There are a number of people in Westminster who believe we are getting closer and closer to full nationalisation," she said. |
| "[They think] it would be simpler and easier for the government to nationalise the banks and that in the long-term it would save the taxpayer a lot of money." | "[They think] it would be simpler and easier for the government to nationalise the banks and that in the long-term it would save the taxpayer a lot of money." |
| Some have pointed out that the government has put more money into RBS than its total share value, she added. | Some have pointed out that the government has put more money into RBS than its total share value, she added. |
| Shadow chancellor George Osborne has criticised government efforts to get the banks lending, likening them to "insuring the car after it has crashed". | Shadow chancellor George Osborne has criticised government efforts to get the banks lending, likening them to "insuring the car after it has crashed". |