Negotiations on a fresh multi-billion pound injection of UK taxpayers' cash into Lloyds which would see the British government take a majority stake in the bank appeared finely balanced today.
It is understood that talks between senior bank executives and the Treasury have been taking place since yesterday afternoon and there were hopes that an agreement could be announced to the Stock Exchange later today.
But in a statement last night, Lloyds Banking Group warned that there was still a lot of detail to be worked through and there was 'no certainty' that a deal would be struck.
It is understood that under the terms of the proposals on the table, the British government would underwrite around £250 billion in 'toxic' assets held by Lloyds Banking Group, limiting its potential losses in a bid to get it lending again.
At the same time, the bank would convert the costly preference shares held by the state - on which it is currently paying 12% interest - into ordinary shares, which attract no interest.
The move would see the British government's stake in the bank rise from 43% to around 60%, giving it a greater say in the way the bank is run as ordinary shares - unlike preference shares - carry voting rights.
