Business

Lloyds and RBS 'won't be further nationalised'

  • 22 May 2013
  • From the section Business
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Signs outside Lloyds TSB and RBS branches

Lloyds has said that following discussions with the banking regulator, the Prudential Regulation Authority, it does not need to sell new shares to boost its capital resources and enhance its ability to absorb future losses.

Later today, Royal Bank of Scotland is expected to say something broadly similar.

This will be a great relief to their shareholders, especially their biggest shareholder, the Treasury.

Because if these two had been forced to issue new equity, to sell new shares, that money might well have had to come from the state, from taxpayers.

And further nationalisation of these vast banks was the last thing on the wish-list of the Chancellor, George Osborne.

So today's announcements - which are the culmination of talks with the regulator initiated when the Bank of England ruled earlier this year that UK banks collectively needed to find £25bn of additional capital by the end of this year - represent a further milestone on the tortuous path to privatisation.

That said, both are committed to strengthening themselves by continuing to sell non-essential assets.

So we don't yet know the precise shape of what will be eventually sold back to the stock market, as and when Lloyds and RBS are privatised.