The European Commission approved the government’s restructuring plans for Lloyds Banking Group, following the £17bn state aid package it received as part of last year’s takeover of HBOS.
EU Competition commissioner Neelie Kroes said the restructuring of the group and its plans to raise £21bn of extra capital, including a £12.5bn rights issue, was compatible with EU rules on state aid.
The EU executive also approved the restructuring plan for Dutch bank ING.
And it said that Belgium’s KBC must make a string of divestments in return for state aid.
Kroes said: ‘There is no such thing as a free lunch. Our policy is to encourage vibrant but responsible competition in the banking sector.’
Lloyds has earmarked 89.7246p as the price at which it will convert bonds into contingent equity capital.
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