One less potential zombie bank in the market. The longer the US drags its feet the more expensive the problem becomes. Leaving these banks out there in a zombie state is not doing anyone any good.
The government is poised to take majority control of Lloyds Banking Group in a deal expected to be announced today. The move will see the taxpayer own at least 60% of Lloyds as the price for insuring £260bn of its riskiest loans.
To help pay for the insurance, Lloyds may attempt to issue new shares. If this fails, the government's stake in the bank, which bought HBOS last September, could reach 75%.
The deal will heap huge pressure on the group's senior management who will face calls to quit for walking into a merger that has dramatically destabilised the enlarged group.
The Lloyds board met throughout yesterday to discuss terms offered by the Treasury to convert £4bn of preference shares into ordinary shares and insure up to £260bn of its most troublesome assets.
