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Chancellor Alistair Darling has told MPs that a fresh state investment in Lloyds will "make (it) a stronger bank and provides better value for the taxpayer".
Mr Darling said overall, Government support to RBS will remain "broadly the same" and the new deal would provide "better risk sharing and greater incentives to exit".
He added that costs to the public purse would be "reduced markedly" under the new deals, which were "better for the taxpayer, better for the banks and better for the economy".
The Treasury announced earlier that it would put another £25.5 billion into Royal Bank of Scotland and £5.7 billion into Lloyds Banking Group - over five times the cost of annual military operations in Afghanistan and Iraq.
Mr Darling said the changes mean there will be more competition among high street banks and the taxpayer will get rid of about £300 billion of "toxic" liabilities.
But Shadow Chancellor George Osborne argued that the measure would cost the equivalent of £2,000 per family and was a "new world record as the single biggest bail-out of any bank anywhere in the world". He also charged the Chancellor with not even being prepared to put the full figure - £39.2 billion - before the Commons.
This extra money comes a year after the Government spent £14.5 billion on shares in Lloyds and pumped £20 billion into RBS to prevent a collapse in the banking sector. The new money is part of a restructuring forced by European Union competition rules.
RBS is selling branches in England and Wales, NatWest branches in Scotland, the Churchill and Direct Line insurance arm and parts of its investment banking business. Lloyds will offload branches in Scotland, Cheltenham & Gloucester branches, and the Intelligent Finance online business.
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