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Text size [+][-]  Saturday March 20 2010GLOBAL EDITION

Considered view
24 Feb 2009 12:25

Black Horse’s sugar lump

Context News

The UK government may allow Lloyds Banking Group to convert £4bn of preference shares sold to the state in October into non-voting equity, the Financial Times reported on February 24. The move would save Lloyds the 12% coupon on the preference shares, thereby enabling it to fund increased domestic lending.

Lloyds share initially rose 1% but by noon they were trading at 54.4p, down 4.2%.

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The UK government looks set to scrap the 12% coupon on its £4bn of preference shares in the bank. Granting financial flexibility is wise, as Lloyds also faces hefty costs to use the state’s toxic-asset insurance scheme. But taxpayers should demand a future quid pro quo.

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