Financial Regulatory Forum

EU’s Kroes says Lloyds bank needs to shrink presence

By Reuters Staff
September 29, 2009

BRUSSELS, Sept 29 (Reuters) – Partially-nationalised British
bank Lloyds needs to shrink its activities in areas
where it is currently dominant to compensate for taking billions
of pounds in state aid, the European Union’s antitrust chief
said.

Lloyds became Britain’s largest mortgage lender after it
acquired its beleaguered rival HBOS earlier this year, which
owned mortgage provider Halifax.

Media reports said the European Commission could force a
sale of part or all of Halifax as a condition for approving
state aid given to Lloyds. Other asset sales could also be
likely.

“We need to ensure aid does not allow the bank to
consolidate and reinforce its leading presence in markets in
which it is already concentrated to the detriment of consumers,”
European Competition Commissioner Neelie Kroes told the European
Parliament on Tuesday.

She said the European Commission was currently assessing
Lloyd’s restructuring plan, tied to the state aid it received
from British authorities.

A Lloyds’ spokesman said the bank was working closely with
the British government and the Commission on the state aid
issue.

The bank’s restructuring would need to ensure its viability,
that it also shoulder part of the burden and that it does not
distort competition, Kroes said.

Lloyds’ shares were up 0.8 percent by 1459 GMT, broadly in
line with a 0.7 percent higher DJ Stoxx banking index.

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