FSAwill test Lloyds' plans

LLOYDS Banking Group&rsquo;s ambitious plans to launch a giant cash call in a bid to reduce its reliance on the government are thought to have been passed to the City watchdog for stress testing.<br /><br />The Financial Services Authority (FSA) is understood to have been called in to stress test the plans, to judge whether Lloyds could survive if economic conditions take a turn for the worse.<br /><br />Lloyds is believed to have submitted a plan to the Treasury in the last few days that would involve it raising capital from investors in a rights issue that some expect to be as large as &pound;10bn.<br /><br />The Treasury is understood to have called in the FSA to investigate the proposals, and is also said to have sounded out the Bank of England.<br /><br />The FSA has carried out stress tests of &ldquo;systemically&rdquo; important banks in recent months, to decide whether they are solid enough to withstand the recession.<br /><br />Lloyds is also thought to have suggested ditching assets, including its pensions and investments arm Scottish Widows and Clerical Medical, as it fights to raise cash.<br /><br />This would allow it to reduce its need for involvement in the government&rsquo;s toxic asset insurance scheme.