Royal Bank of Scotland Group plc last month secured a similar waiver but in doing so had to convert £5 billion of preference shares into ordinary stock, increasing the government's stake in the bank to nearly 70% from 58%.
The Financial Times reported Tuesday that the Lloyds' move will entail the government swapping its preference shares for another form of nonvoting securities. It will save Lloyds £480 million a year in interest payments and the embarrassment of making the government, which holds a 43% stake, its majority owner.
It is unclear whether Royal Bank was offered the same option when it swapped its own preference shares in January -- or whether it would have made any difference. But the plan, which follows Monday's announcement that state-owned Northern Rock plc will change its policy and increase rather than cut lending, adds to the picture of a government that perhaps through necessity has made improvisation its default-mode.
- Laura Board
Accusations that U.K. Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling are ad-libbing their response to the country's banking crisis gained traction Tuesday with an unconfirmed report that the state will probably waive a 12% interest rate on £4 billion ($5.8 billion) of preference shares it holds in Lloyds Banking Group plc in return for lending commitments.
