Lloyds bank executives hammer out deal with UK government
It was announced late last night that the UK government will be increasing its stake in Lloyds Bank to a massive 75% as the authorities step in to take control. This is perhaps the worst case scenario for Lloyds Bank shareholders as the bitter discussions with the UK Treasury came to a halt with an agreement which is most definitely more beneficial to the government than current Lloyds Bank directors and shareholders.
There are also suggestions that the chairman and chief executive will need to fall on their swords over the coming weeks as the new regime looks to move into Lloyds Bank and clear the decks for the future. In effect Lloyds bank has been dragged down by the disastrous bailout of HBOS, which in many ways was done as a favour for the UK government, and the dispute over premium payments as Lloyds Bank attempted to place £260 billion of toxic assets in the Treasury's asset protection scheme.
While Lloyds bank is by no means dead this is a dramatic turnaround for one of the most conservatively administered banks in the UK and does not bode well for the future of other banking institutions in the country. If Lloyds bank can be forced to fall on its sword and accept government funding to the tune of £14 billion in exchange for effectively "giving the company away" then who will be next to fall into the lap of the UK authorities?
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