Lloyds Banking Group in Talks for Government Assistance

Shares of Lloyds Banking Group fell 11.5%, or 8.60 pence (12 cents), to 66.40 pence (94 cents), on Friday, according to Forbes.com. The bank and British government not yet agreeing on a deal for legal assurance may have caused the fall. Lloyds’ stock had soared more than 20% on Thursday, which some attribute to the hope that Lloyds would obtain government assistance, such as Royal Bank of Scotland did with its agreement to get state-backed insurance on its toxic assets.

The bank's executives were locked in talks this weekend with UK Financial Investments (UKFI), the body that oversees the government’s bank stakes and owns 43% of Lloyds, to secure taxpayer backing for more than £250bn of assets as part of a Treasury-backed insurance scheme, according to www.guardian.co.uk.

HBOS, which the group acquired in January this year, swung to a net loss of 7.58 billion pounds from a profit of 3.97 billion pounds in 2007, according to MarketWatch. The underlying pre-tax loss at HBOS was 8.49 billion pounds.

The takeover of HBOS and its practices also have raised concerns. UKFI and Lloyds Banking Group Plc are investigating whether payouts to former directors at Lloyds’ HBOS unit were “legally necessary,” according to Bloomberg.