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UK government takes 43% stake in Lloyds TSB HBOS

The UK government has been left with a 43% stake in the merged Lloyds TSB HBOS entity after no shareholders took up the offer of extra shares. While this move was fully expected just a few hours ago there are concerns that the government is slowly taking a stranglehold over the financial sector in the UK although they appear to have very little input into everyday activities. If taxpayers are investing money, surely taxpayers should expect a return?

Despite promising a substantial increase in both business and personal finance at the time of the original bank rescue package the government has yet to deliver on this particular aspect of its strategy. The more money which is poured into the system the more concern there is that the banking sector is over and above anything else in the UK economy. This growing power of the banks will swamp the government and while headlines would suggest they are pressurising the banks for the release of further capital, in practice nothing has changed.

Gordon Brown appears to have learnt his lesson and has not gone head-to-head in the media, with the banking sector, for some time. Any investor taking a 43% stake in a company would expect to have some say so in the future direction and policies of the operation but whether the UK government will enjoy such a situation remains to be seen.

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