Lloyds to increase lending as it signs up to Asset Protection Scheme

| March 8, 2009 | 0 Comments

After days of negotiations, Lloyds Banking Group has now agreed to sign up to the Government’s Asset Protection Scheme.

The scheme, which insures against losses arising from toxic assets, will see Lloyds commit to lending at least £28 billion over the next few years.

As a result, the Government’s stake in the bank will rise from 43% to 65% and rising to 77% when non-voting shares are included.

According to the BBC, the Treasury will insure up to £260 billion of Lloyd’s toxic assets.

Royal Bank of Scotland (RBS) was the first bank to sign up to the scheme which will see the Treasury insure £325 billion worth of assets.

In the meantime, with stakes increasing in both Lloyds and RBS, Business Secretary Lord Mandelson has reiterated this weekend that the Government has no plans to nationalise the banking sector.

Commenting on the deals between both banks, Lord Mandelson told the BBC he is “pretty confident that taxpayers would eventually get something back“.

However, the agreement is fuelling speculation that the pressure is on chairman, Sir Victor Blank, and chief executive, Eric Daniels, to resign.

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