24 Feb

Government 'in new Lloyds TSB lending deal'

Government 'in new Lloyds TSB lending deal'

Lloyds TSB could provide more mortgage finance under a new deal with the government that will see interest on a taxpayer loan waived.

The bank has been in talks with chancellor of the exchequer Alistair Darling over the proposed move, which would see £480 million of interest payments being set aside, the Financial Times reports.

In return, the bank would increase its lending to both mortgage customers and businesses.

Such a move may include providing more finance to buy-to-let investors.

The report also suggested that Mr Darling could decide to convert £4 billion of preference shares to stop the government's stake in the lender rising above 50 per cent.

Last week, Liberal Democrat Treasury spokesman Vince Cable said Lloyds TSB and the Royal Bank of Scotland had been "in effect" nationalised by the government and therefore it should force them to provide more lending.

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