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Government Shareholding

Volume 487: debated on Wednesday 28 January 2009

To ask the Chancellor of the Exchequer (1) in relation to the preference shares taken by the Government in (a) Lloyds Bank, (b) HBOS and (c) Royal Bank of Scotland, whether non-payment of the preference dividend by the board of directors would be treated as an act of default entitling the Government to initiate proceedings for winding-up the company; (249678)

(2) in relation to the preference shares taken by the Government in (a) Lloyds Bank, (b) HBOS and (c) Royal Bank of Scotland, if he will bring forward proposals to (i) make them cumulative and (ii) adjust the coupon on the shares to a lower rate;

(3) in relation to the preference shares taken by the Government in (a) Lloyds Bank, (b) HBOS and (c) Royal Bank of Scotland, whether, if the board of directors decide to pass the dividend the lost dividend will be recoverable for the public purse.

[holding answers 20 January 2009]: The terms of the agreements with the recapitalised banks on preference shares were set out in Chancellor’s statements to the House on 8 October 2008, 13 October 2008 and 19 January 2009, and in press notices on HM Treasury’s website. The placing and open offer agreements are available in the House of Commons Library.