Britain may offer Lloyds Group a new deal

The British government may increase its stake in Lloyds Banking Group to 70 percent with a new bailout deal, reports say.

British Chancellor of the Exchequer Alistair Darling has agreed in principle to the deal, which would insure $353 billion worth of Lloyd’s troubled assets, The Daily Telegraph reported Friday.

The bulk of the assets were on the books of HBOS when Lloyds purchased the firm last fall, the newspaper said.

HBOS last month reported a 2008 pre-tax loss of $15.5 billion.

The new bailout involves converting the government’ $5.6 billion in preferred shares to non-voting ordinary shares, which would increase the government’s holdings from 43 percent to around 70 percent.

There are still extensive negotiations and the Lloyds board still has to get their head around this and agree to it, a source told the newspaper.