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| £250bn Lloyds asset deal on cards | £250bn Lloyds asset deal on cards |
| (about 1 hour later) | |
| Lloyds Banking Group is close to a deal with the government for a £250bn asset insurance scheme, the BBC has learned. | Lloyds Banking Group is close to a deal with the government for a £250bn asset insurance scheme, the BBC has learned. |
| The agreement could increase the taxpayer's share in the bank from its current level of 43%, according to sources at the Treasury. | The agreement could increase the taxpayer's share in the bank from its current level of 43%, according to sources at the Treasury. |
| It is understood the deal has not yet been finalised but the government hopes to do so as soon as possible. | |
| Under the plan the government would insure up to £250bn of assets, and would get non-voting shares in return. | Under the plan the government would insure up to £250bn 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. |
| 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." |
| The deal is part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses. 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 deal is part of the Treasury's taxpayer-backed Asset Protection Scheme to insure banks' riskiest assets against further losses. 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 |
| 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 some politicians believed full nationalisation would restore confidence in the banks more quickly. | BBC political correspondent Carole Walker said some politicians believed 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". |
| Lib Dem 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. | Lib Dem 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. |