Lloyds on A$41 billion fundraising drive
(26 October 2009 – UK) Lloyds has announced a A$41 billion fundraising drive to help repair its balance sheet after months of struggling since the take over of HBOS.
The acquisition which was intended to create a UK banking giant, which would hold close to one third of the savings and mortgage market in the UK, has resulted in a tumultuous year for Lloyds.
The fundraising drive, which will be one of the largest ever seen in London, will see the bank ask its shareholders to inject about £12 billion (A$21 billion) through a rights issue.
Taxpayers, who own around 43 percent of Lloyds, will be expected to cough up around £5 billion and a further £11 billion will be raised through the issue of new loans to replace existing borrowings.
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.
It is reported that the raising should help Lloyds avoid punishment from the European Commission.
The fundraising drive, which will be one of the largest ever seen in London, will see the bank ask its shareholders to inject about £12 billion (A$21 billion) through a rights issue.
Taxpayers, who own around 43 percent of Lloyds, will be expected to cough up around £5 billion and a further £11 billion will be raised through the issue of new loans to replace existing borrowings.
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.
It is reported that the raising should help Lloyds avoid punishment from the European Commission.
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