Bank of England Governor Mervyn King was the bearer of bad news Tuesday as he told a parliamentary committee that U.K. banks may need yet more government capital. Lloyds TSB Group plc, takeover target HBOS plc and Royal Bank of Scotland Group plc have already agreed to take up to £37 billion ($55.4 billion) of state aid, while Barclays plc angered institutional investors by shunning the state and opting instead to raise £5.8 billion through two pricier securities issues to Middle Eastern backers. But King says the fundraisings may not be enough. He told a Treasury Select Committee that the U.K. "may not have come to an end in the process of recapitalization." There was, however, some good news for the banks as King hinted at further rate cuts. And Royal Bank of Scotland, the likely recipient of the lion's share of state aid, got an additional boost. Analysts at Citigroup Inc. wrote Tuesday that they believe the bank "has sufficient capital to deal with a prolonged economic downturn." - Laura Board
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