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No 10 rules out Lloyds bank move | |
(about 4 hours later) | |
Gordon Brown's government does not plan to nationalise banking group Lloyds, his spokesman has said. | |
Lloyds Banking Group shares fell 20% in morning trade in reaction to Friday's announcement of massive losses at HBOS, but by mid-afternoon were up 0.16%. | |
The early slump raised concerns Lloyds, which is 43%-government owned, could need more funds or be nationalised. | |
But a spokesman for Mr Brown said the government was giving "no active consideration to nationalising Lloyds". | |
Wider stability | |
And the spokesman added that Mr Brown had no regrets about allowing the merger between Lloyds TSB and HBOS to go ahead, his spokesman has said. | |
He added that the prime minister still believed the merger was in the interests of the wider stability of the financial system. | He added that the prime minister still believed the merger was in the interests of the wider stability of the financial system. |
Lloyds shares had already fallen by 32% on Friday after it announced it expected losses of nearly £11bn for 2008 at HBOS. | Lloyds shares had already fallen by 32% on Friday after it announced it expected losses of nearly £11bn for 2008 at HBOS. |
And after volatile Monday trading, shares fell further into negative territory after the ratings agency Moody's downgraded Lloyds' bank deposit and senior debt ratings. | And after volatile Monday trading, shares fell further into negative territory after the ratings agency Moody's downgraded Lloyds' bank deposit and senior debt ratings. |
Moody's cited "the high level of troubled and higher risk exposures within HBOS" which it considered would weaken the profitability of the overall group. | Moody's cited "the high level of troubled and higher risk exposures within HBOS" which it considered would weaken the profitability of the overall group. |
Further injection? | Further injection? |
The government has already poured £17bn into the Lloyds Banking Group. | The government has already poured £17bn into the Lloyds Banking Group. |
FROM THE TODAY PROGRAMME More from Today programme | FROM THE TODAY PROGRAMME More from Today programme |
However, some analysts are now questioning Lloyds' decision to take over HBOS, and believe that it may need to be nationalised, like Northern Rock. | However, some analysts are now questioning Lloyds' decision to take over HBOS, and believe that it may need to be nationalised, like Northern Rock. |
But speaking to the BBC, financial secretary to the treasury Stephen Timms said the government was "not contemplating at the moment" putting any more money into Lloyds. | But speaking to the BBC, financial secretary to the treasury Stephen Timms said the government was "not contemplating at the moment" putting any more money into Lloyds. |
"I am confident that, in the long term, this [Lloyds] is going to be a strong and successful commercial operation," he said. | "I am confident that, in the long term, this [Lloyds] is going to be a strong and successful commercial operation," he said. |
However, he added that the government would "take whatever action is needed to secure long-term stability in the financial system". | However, he added that the government would "take whatever action is needed to secure long-term stability in the financial system". |
'Financial recognition' | 'Financial recognition' |
Over the weekend, it emerged that Lloyds planned to reward retail and commercial staff with bonuses reportedly worth about £120m. | Over the weekend, it emerged that Lloyds planned to reward retail and commercial staff with bonuses reportedly worth about £120m. |
Lloyds said its employees deserved "financial recognition" for hitting targets, but the group has been criticised by investors and politicians for rewarding failure following the government bail-out. | Lloyds said its employees deserved "financial recognition" for hitting targets, but the group has been criticised by investors and politicians for rewarding failure following the government bail-out. |
The government and the Tories have said executives should not receive bonuses, but staff on lower salaries should. | The government and the Tories have said executives should not receive bonuses, but staff on lower salaries should. |
Lloyds' five executive directors have all voluntarily agreed to forego any bonus they may be awarded for 2008. | Lloyds' five executive directors have all voluntarily agreed to forego any bonus they may be awarded for 2008. |
Last week, bosses and former bosses of key British banks were grilled by MPs about their role in the financial crisis. | Last week, bosses and former bosses of key British banks were grilled by MPs about their role in the financial crisis. |
The former heads of the two biggest UK casualties of the banking crisis - Royal Bank of Scotland and HBOS - apologised "profoundly and unreservedly" for their banks' failure. | The former heads of the two biggest UK casualties of the banking crisis - Royal Bank of Scotland and HBOS - apologised "profoundly and unreservedly" for their banks' failure. |