Alistair is told to start realising some assets of the shareholder owned banks.

UK Chancellor, Alistair Darling expects to receive the go ahead that they UK will be recipients of some much needed financial aid within the coming weeks from the European Commission. However with the aid will come some conditions, particularly that they the commission expects to seek the shrinking of assets in the partially state owned Lloyds Banking Group.

Officials from the UK Treasury strongly suspect that the Brussels based commission could stipulate a reduction in asset holdings or agree to an even more unacceptable situation where the EEC will have a say on the running of the bank in the future.

Lloyds management team have admitted that these are real possibilities and have even stated them in writing in a tender issued on Wednesday as part of its £4billion request offer.

Talks between officials at the UK Treasury Department and European Commission officials in Brussels have been taking place for the last few weeks, and appear to be drawing close to the point where serious decisions have to be made.

Lloyds’ warning underscores the new and uncertain situation that state owned banks will have to face for the foreseeable future, with not only Lloyds but also the Royal Bank of Scotland having to come to terms with being part of a completely different picture.

Under European Union rules, companies (even banks) that have been the recipients of government aid are required to restructure their balance sheets and their assets, toxic or otherwise, to offset any competitive edges or advantages stemming from the assistance that they have received.

UK Chancellor, Alistair Darling and Prime Minister Gordon Brown have consistently borrowed to pay for rescuing banks that have reported around eighty billion pounds in losses and asset write-downs since 2007.
Till now, the government pledged has pledged around forty billion pounds in order to re-finance banks whilst guaranteeing hundreds of billions of pounds worth of loans, some of which are “highly toxic”

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Tags: Alastair Darling, Debt, EEC, Financial News, Lloyds Banking Group, UK treasury