HM Treasury has published a press release which sets out the Government’s agreement to Lloyds Banking Group (Lloyds) participating in the Asset Protection Scheme (APS). The Government is also agreeing to convert its preference shares in Lloyds to ordinary shares. As set out in the Government's announcement of 27 February 2009, the APS aims to remove uncertainty about the value of banks' past investments and this package of measures will allow Lloyds to increase its lending to the UK real economy.

Lloyds has agreed to review its existing remuneration policy and implement a policy consistent with the detailed principles set out in the FSA's Code of Practice on Remuneration Policies. The Government, in consultation with UK Financial Investments, has also agreed that on implementation of the APS for Lloyds it will replace HM Treasury’s £4 billion of preference shares in Lloyds with new ordinary shares, with the aim of supporting stability in the financial system; ensuring continued protection for ordinary savers, depositors, businesses and borrowers; and safeguarding the interests of the taxpayer.

View Asset Protection Scheme - agreement with Lloyds, 7 March 2009