UK Govt's Further Measures to Increase UK Mortgage Lending

Alistair Darling has offered to drop Lloyds Banking Group's £480m annual interest bill on a taxpayer loan, in return the bank will be expected to provide billions of pounds in new mortgage lending and other loans, especially to small businesses.

The chancellor is also preparing to convert £4bn of government preference shares -- which carry a 12% coupon -- to ease financial pressures on Lloyds and as part of a wider deal to stimulate the economy by increasing lending.

Although talks are will continue this week, it is expected that the preferred shares will be converted into other forms of non-voting equity. This will prevent the government's 43% stake in the bank rising above 50%.

Editor's notes:

Alistair Darling gets 10 out of 10 for effort in my book, recent business studies have shown that the UK property market depression will be prolonged unless banks are lending 50,000 mortgages per week by 2010. Darling is certainly going all out to make this happen.