British government to drop Lloyds Banking Group interest charge

There are rumors that the British government could drop Lloyds Banking Group’s (LLOY.L) interest charge on a taxpayer loan. This interest amounts to £480 ($700 million); this will be in exchange for the bank to increase their lending to homebuyers and small businesses.

This plan will hopefully help to reduce the financial pressures on Lloyds, as well as help to increase lending in Britain. This plan is very similar to the deal that Finance Minister Alistair Darling did with Royal Bank of Scotland (RBS.L) last month, their preference shares were converted into ordinary shares. This saw taxpayers stake in the bank increase from 50 to 70 per cent.

Later this week it is expected that Lloyds Banking Group’s (LLOY.L) and Barclays (BARC.L) will place billions of toxic assets into a UK government insurance scheme, plans of this should be unveiled sometime later this week.

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