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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

7 Mar 2009

Lloyds take the toxic plunge

Lloyds bank have decided to opt into the Government scheme to underwrite so called 'toxic investments' in return for a majority shareholding. This adds £260bn to the funds underwritten by the UK government, taking the total 'value' up to way over the £500bn mark. There is now serious speculation that Lloyds could join Northern Rock in becoming totally nationalised.
This moves gives stability to the bank, but the cost to the taxpayer is uncertain, the UK leads the way in supporting it's financial community, but the taxpayer could be paying out for years to come.
The principal of the deal is that Lloyds allows the government to increase it's stake in the bank from 43% to 65%. In return the government covers £260bn of debt that may turn out to be too high risk for the bank to handle. In effect, the UK taxpayer will take the risk on behalf of the bank.

Related posts:
RBS toxic assets underwritten
Sir Fred's pension
Quantitative easing on it's way

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