Lloyds and Royal Bank of Scotland Given More Aid JULIA WERDIGIER Published: November 3, 2009 LONDON — A year after the financial crisis nearly upended the British banking industry, two major lenders here were thrown a second financial lifeline by the government on Tuesday and ordered to shrink their businesses. The government announced that it would inject £31.3 billion ($51.4 billion) into the two banks, the Lloyds Banking Group and the Royal Bank of Scotland.
As part of the plan to bolster its finances, Lloyds will sell new common stock. R.B.S., the more troubled of the two banks, will come under increased government ownership.
The developments signify another humbling moment for the stalwarts of British finance, both of which trace their history to the 18th century. The move occurred after Neelie Kroes, the competition commissioner of the European Union, pressed troubled banks in the union to sell major assets.
“U.K. banking lost control of its own destiny,” said Gavin L. Kretzschmar, a professor at the University of Edinburgh Business School. “These steps fundamentally change the way Lloyds and R.B.S. will do business going forward.”