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Lloyds bank shares fall 30% on EU concerns

Amid concerns that the European Union could effectively outlaw the merger of Lloyds bank and HBOS we saw a significant fall in the share price of Lloyds bank yesterday. The shares fell by 30% as it became apparent that EU leaders have yet to ratify the rescue package and may actually demand that large chunks of the operation are sold off to third parties. This is despite the fact that the UK government has earmarked billions upon billions of pounds for the enlarged group to stave off any potential financial difficulties in the future.

If the deal was revoked by the EU this would be a severe slap in the face for Gordon Brown and the UK government who went all out to ensure the deal went through and supplied significant financial assistance in the short term. The fact that the competition rulebook was scrapped for this particular deal shows how vital it was in the fight to save the UK financial sector from collapse. If the EU was to invoke substantial conditions upon the merger and government financing it is uncertain how this would impact upon the company in the short to medium term and indeed how it would impact upon the sector as a whole.

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