Complete nationalisation of Lloyds not on table, says No10

Downing Street insisted today that there were no plans for the outright nationalisation of Lloyds Banking Group as shares in the company continued to struggle.

Amid growing concern about the group's position, Gordon Brown's spokesman also dismissed any suggestion that the Prime Minister regretted the Lloyds-HBOS merger.

Alarm spread after a shock warning of £10 billion in annual losses at HBOS before the weekend.

The two banks are 43 per cent owned by the state after receiving £17 billion in bailout cash, but the market value of the group is now less than £10 billion.

Lord Turner of Ecchinswell, chairman of the Financial Services Authority, suggested yesterday that HBOS could have been saved without the need for a takeover.

Tory leader David Cameron said the merger was now looking like a "bad decision".

The Prime Minister's spokesman said today that Mr Brown had no regrets "at all" - but stressed that the proposal came from the banks themselves and was supported by opposition parties.

"The idea of the merger originally came from the companies involved who approached the Government to ask us to change competition legislation in order to let it happen," he said.

"We are glad that we did that, and we did that with cross-party support at the time.

"The Prime Minister remains of the view that the merger is in the wider interest of the stability of the UK financial system and I think you have to ask yourself what would the alternative have been had Lloyds not taken over HBOS at the time.



"It would have been almost certainly that HBOS would have found it very difficult to continue. That would have meant the Government and the taxpayer intervening to support the totality of HBOS."



Asked whether the full-blown nationalisation of Lloyds was in prospect, he added: "While of course nothing is ruled out, there is no active consideration being given to the nationalisation of Lloyds."











With reports that Lloyds is planning bonuses for staff this year of £120 million, Downing Street also restated its position that there should be "no rewards for failure".

Talks between Government officials and the bosses of Royal Bank of Scotland (RBS), another partly state-owned bank planning to pay bonuses, are already under way.



Similar discussions look likely to follow with Lloyds' chiefs.



Mr Brown's spokesman said bonuses should be based on "long-term sustainable performance" and with "claw back" provisions attached, while the regulator should set guidelines for remuneration policy.



"These are the key principles and we need to discuss these with the managements of the individual banks," he added.



"In the case of RBS that is what we are in the process of doing. In the case of Lloyds we haven't actually received any proposal or had any substantive discussions with them yet.



"But we certainly rule nothing out at this stage."



There is an emerging political consensus that bonuses for bankers would be inappropriate after a year in which the system came close to collapse.



RBS has taken £20 billion in Government support and is now 68% state-owned. It is reported to be considering bonuses for staff of about £1 billion.



Liberal Democrat Treasury spokesman Vince Cable said: "As a general policy position no bonuses should be paid to banks that have failed and are dependent on the taxpayer."



David Cameron has proposed a cap of £2,000 and called for the Government to fight executives and traders in court if they try to enforce contractual entitlements to bonuses.



On the Lloyds TSB takeover of HBOS, which the Tory leader supported at the time of its proposal last autumn, Mr Cameron added that it was now looking like "a bad decision".



He added that his business spokesman Kenneth Clarke was "very perceptive" to have opposed the merger from the backbenches.



Lord Turner said yesterday that the merger seemed a "sensible way of buttressing HBOS", but added: "There could have been a different way of directly supporting HBOS and keeping Lloyds separate."

News
The Banksy image in Folkestone before it was vandalised
people
Life and Style
tech

Sales of the tablet are set to fall again, say analysts

Sport
football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
i100
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
News
First woman: Valentina Tereshkova
peopleNASA guinea pig Kate Greene thinks it might fly
News
Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister
news

Met Police confirm there was a 'minor disturbance' and that no-one was arrested

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010
films

George Lucas criticises the major Hollywood film studios

Voices
Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'
voices

Does Chris Grayling realise what a vague concept he is dealing with?

Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
News
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)
news

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
Life and Style
gaming

I Am Bread could actually be a challenging and nuanced title

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Year 5 Teacher

£80 - £140 per day: Randstad Education Leeds: Year 5 Teacher KS2 teaching job...

Software Developer

£35000 - £45000 Per Annum Pensions Scheme After 6 Months: Clearwater People So...

Systems Analyst / Business Analyst - Central London

£35000 - £37000 per annum + Benefits: Ashdown Group: Systems Analyst / Busines...

Senior Change Engineer (Network, Cisco, Juniper) £30k

£30000 - £35000 per annum + Benefits: Ampersand Consulting LLP: Senior Change ...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Salisbury ranked seventh in world’s best tourist cities

The city is home to one of the four surviving copies of the Magna Carta, along with the world’s oldest mechanical clock
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album