Chancellor of the Exchequer Alistair Darling said UK banks are best run privately as he tries to calm speculation the government is about to take a majority state in Lloyds Banking Group Plc.
Darling said on Sunday that the government has already put in place a programme to help banks. The Treasury is playing down talk that Darling will hold discussions with Lloyds executives this weekend.
“I have made it clear on many, many occasions that we believe that banks are best run on a commercial basis in the private sector, properly supervised and regulated,” Darling told reporters in Rome. “That’s our clear preference and our clear belief.”
Lloyds share price dropped 32 per cent on Saturday after saying it expects HBOS Plc, the UK lender it took over last month, to report a pretax loss of about 10 billion pounds ($14.5 billion). The UK owns 43 per cent of the company after overseeing a bailout last year that brought the two lenders together.
HBOS posted about 7 billion pounds of losses on loans to companies in 2008 as Lloyds applied “more conservative” accounting rules, the bank said yesterday. The loan impairments are more than double HBOS’s own forecast in December.
Lloyds Chief Executive Officer Eric Daniels said this week the bank would have done “three to five times” more due diligence on the government-brokered takeover had it not been for time pressures.
