LONDON (Dow Jones)--Lloyds Banking Group PLC (LLOY.LN), 40%-owned by the U.K. government, is under pressure from shareholders to sell its Scottish Widows insurance business, which could raise about GBP7 billion, The Observer newspaper reports Sunday, citing some unidentified shareholders. Investors argue it will become more expensive for Lloyds to own Widows when new rules being drawn up by the Basel Committee on Banking Regulation force banks to set aside extra funds to protect themselves against another financial meltdown. Under the new regime to be introduced in 2012/13, banks will be barred from counting capital in their insurance subsidiaries as "common capital" which can also be deployed to cover their mainstream banking operations. The "double counting" of capital will be outlawed as too risky in the wake of the credit crunch, according to the report. Lloyds couldn't immediately be reached for comment. Newspaper website: http://observer.guardian.co.uk/ -London Bureau, Dow Jones Newswires; +44 (0)20 7842 9320 (END) Dow Jones Newswires July 04, 2010 06:27 ET (10:27 GMT)