(2) whether the preference shares purchased by the Commissioners of HM Treasury in (a) HBOS plc, (b) RBS Group plc and Lloyds TSB plc are (i) redeemable, (ii) fixed rate, (iii) non-cumulative and (iv) non-voting shares; what the (A) nominal value and (B) rate of dividend is of each type of preference shares; and what the (1) earliest date the company can redeem the shares and (2) latest date the shares have to be redeemed is for each type of share.
[holding answer 23 October 2008]: The Government have agreed to underwrite issues of ordinary shares in RBS, Lloyds TSB and HBOS totalling £28 billion. The Government will buy any shares which are not purchased by existing or new shareholders. These shares are voting shares.
The Government are also purchasing preference shares in the firms. The preference shares, which HM Treasury has agreed to invest in RBS, Lloyds TSB and HBOS are redeemable, fixed rate, non-cumulative and non-voting shares. As soon as the preference shares have been repaid, payment of ordinary dividends would be permitted.
The Government's investment is subject to certain conditions, details of which are available in the agreements with the banks. Copies are in the Library.
[holding answer 23 October 2008]: The indicative timetable included in the circular issued to shareholders by Lloyds TSB shows that they expect the ordinary shares in the merged entity to be issued on 19 January 2009, subject to shareholder approvals. The RBS circular similarly indicates that they expect the ordinary shares to be issued on 1 December 2008. We expect the new preference shares to be purchased on the same day as the ordinary shares are issued.