The British state is to take a 43.4 percent stake in the combined Lloyds TSB-HBOS bank after shareholders largely shunned both lenders' rights issues, the two banks said on Monday.

Existing shareholders bought just 0.5 percent of the Lloyds shares offered in its rights issue, and just 0.24 percent of the HBOS shares, leaving the government to buy the remainder, the banks said.

The government offered to underwrite both banks' rights issues as part of its 37 billion pound ($56.10 billion) bailout of the UK banking sector in October last year.

The low level of shareholder participation was expected, as both banks' shares had fallen below the price at which new stock was offered to investors.

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