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Lloyds shares plunge further as credit rating cut

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by Kay Mitchell

Moody’s, the ratings agency, has downgraded Lloyds Banking Group’s bank deposit and senior debt ratings sending its shares plummeting even further.

Moody’s has cut Lloyds Aaa rating to Aa3, which brings it into line with Royal Bank of Scotland and Barclays.

Yesterday, shares in the bank fell amid speculation that the Government may be forced to inject more money into the bank, or even nationalise it. This fall followed a 30% drop on Friday after Lloyds shocked the market by revealing a potential £10 billion loss at HBOS.

Meanwhile, a spokesperson for Prime Minister Gordon Brown has ruled out nationalising the bank and said the Government was giving “no active consideration to nationalising Lloyds”.

The spokesperson added further that there were no regrets about the merger between Lloyds TSB and HBOS since the merger was “in the interests of the wider stability of the financial system“.

Lloyds, which is 43% owned by the taxpayer, was encouraged by the Government to takeover HBOS, following the demise of US investment bank, Lehman Brothers last September.

Lloyds is set to announce its results later this month.

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News posted: February 17, 2009

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