LBG on sale
(26 November 2009 – UK) 43 percent state-owned Lloyds Banking Group is offering existing shareholders new stock at a heavily discounted price of 37 pence (A.77 cents) each in a bid to avoid taking part in the governments ‘toxic debt’ scheme.
The ambitious goal is to raise £22.5 billion (A$40.46 billion) in fresh capital; deriving £13.5 billion from the mammoth sale to the existing shareholders.
The bank also plans to raise an extra nine billion pounds by converting existing debt into bonds.
LBG said in a statement that the issue price at which the new shares will be offered, pursuant to the rights issue, has been set at 37 pence per new share.
A state-brokered deal saw LBG purchase ailing rival HBOS and the deal has continued to cause the group to struggle ever since.
The cash call will free Lloyds from having to take part in a costly government insurance scheme.
The bank was expected to put £260 billion of toxic loans into the Government Asset Protection Scheme (Gaps), a plan designed to limit damage from loans that turned bad.
This would have seen the government take a 60 percent stake in the bank and it was something the bank’s directors were keen to avoid.
The bank also plans to raise an extra nine billion pounds by converting existing debt into bonds.
LBG said in a statement that the issue price at which the new shares will be offered, pursuant to the rights issue, has been set at 37 pence per new share.
A state-brokered deal saw LBG purchase ailing rival HBOS and the deal has continued to cause the group to struggle ever since.
The cash call will free Lloyds from having to take part in a costly government insurance scheme.
The bank was expected to put £260 billion of toxic loans into the Government Asset Protection Scheme (Gaps), a plan designed to limit damage from loans that turned bad.
This would have seen the government take a 60 percent stake in the bank and it was something the bank’s directors were keen to avoid.
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