No Lloyds nationalization, Treasury says

The British government denied it was considering pumping more money into Lloyds Banking Group, which lost billions on a purchase of HBOS.

While leaving future options open, we are not contemplating (increasing investment) at the moment, Treasury Minister Stephen Timms said.

I am confident that in the long term this is going to be a strong and successful commercial bank.

A bank spokesman called talk of nationalization, complete tosh, The Daily Telegraph reported Monday.

Lloyds’ shares dropped 20 percent Monday morning before staging a recovery — the jolt taken after Lloyds said Friday that HBOS, the mortgage lender it acquired last fall, lost $15.6 billion last year.

Analysts said the bank would need to raise as much as $14 billion to stay afloat, the newspaper said.

If losses were to accelerate there is a risk capital could reduce to levels below which the market would have confidence in the group, analyst John-Paul Crutchley at UBS told the Telegraph.

A UK Shareholders’ Association said the Lloyds and HBOS merger has been an absolute disgrace.

Investors were furious Lloyds had already spent half of the roughly $25 billion it had received in government assistance, the newspaper said.