asked Her Majesty's Government:

Whether the European Commission required dividends on ordinary shares not to be payable until preference shares were redeemed under the Government's bank recapitalisation scheme; and, if so, why. [HL5721]

State aid approval for the bank recapitalisation scheme was given on the understanding that there would be incentives for early redemption of the preference shares held by the UK authorities.

However, there was no agreement that the options available to the UK in doing so should be limited to a no-dividends policy.