Business

Friday October 9, 2009

Lloyds eyes £15bil rights issue


Report: Banking regulator scrutinising the plan

LONDON: Part-nationalised British lender Lloyds Banking Group is sounding out investors about a £15bil rights issue to help it avoid a government scheme to insure it against credit losses, The Financial Times reported yesterday.

Banking regulator, the Financial Services Authority (FSA), was scrutinising the plan, the FT said, citing people close to the planning for the deal, in which Lloyds would also sell assets such as insurance business Scottish Widows, and shrink its balance sheet.

On Wednesday, Sky News reported that Lloyds had presented the FSA with a plan to raise £25bil through a rights issue, asset disposals and other measures to allow it to withdraw completely from the government-sponsored asset protection scheme.

The FT said the government, which owns a 43.5% stake in Lloyds, would likely subscribe to the rights issue and could inject a further £6.5bil of public funds into the company.

A detailed plan could be presented to finance minister Alistair Darling within days, the FT said, citing one person close to the affair.

A spokesman for Lloyds Banking Group said yesterday it was still looking at ways to scale back or cancel its participation in the government-backed scheme.

“There are a range of options available to us and we continue to monitor them,” the spokesman said. “We issued a stock exchange announcement two weeks ago and our position has not changed since then.”

Lloyds said on Sept 18 that it was in talks with the government to scale back or cancel its participation in the so-called asset protection scheme, seen as expensive and potentially unnecessary following an upturn in the economy since it was first drawn up in March.

The FSA had previously set tougher-than-expected capital conditions on Lloyds’ potential exit from the programme, making an outright departure less likely. — Reuters


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