UK government takes majority stake in bank

LONDON, England The British government confirmed Saturday that it will take majority control of another bank to help shore up the nation's hard-hit economy.It will take a majority share in Lloyds Banking Group, making it the third bank after Northern Rock and Royal Bank of Scotland that the government will effectively control. The deal with the Treasury will see Lloyds commit to lend at least £28 billion ($40 billion) over the next two years, Treasury chief secretary Stephen Timms said. In return the government will insure £260 billion pounds ($366 billion) of the group's most toxic assets. As a result, its holding in the bank could increase from 43 percent to 66 percent of voting shares. The government could end up owning as much as 77 percent of the bank -- though it would not have voting rights on all of its shares. Its fee for limiting Lloyds' losses from the bad assets is £15.6 billion ($22 billion). Under the scheme, the bank will take the first hit of up to £25 billion ($35 billion) on toxic assets before the taxpayer steps in. Timms said that the agreement was a "major step" in restoring lending capacity in the UK.