Lloyds issue shrinks taxpayers' share to 41%

Published on Friday 12 February 2010 21:33

LLOYDS Banking Group rounded off a bumper £23 billion repair to its balance sheet, issuing a final tranche of new shares in a move that will trim the taxpayers' stake.

Lloyds, part state-owned after being rescued at the height of the financial crisis, will issue 3.14 billion new shares at 48.7p each to close an earlier debt exchange programme, it said.

The issue price for the new shares, which will be used to pay off bondholders, is a 1.15 per cent premium to Thursday's close, down 1.6p at 46.6p.

The bank had the opportunity of paying cash, but chose the most widely expected option paying in new shares, diluting the taxpayers' stake from 43 per cent to 41 per cent. "This announcement marks the successful completion of our capital raising exercise," Lloyds said in a statement.

"We would like to thank our investors for their continued support."

Lloyds, Britain's largest retail banking group, raised 13.5bn in a record-breaking cash call last year, part of a bumper capital raising effort worth more than 23bn to help it avoid a state-backed scheme for bad debts.

The latest financing package follows its 185 million sale of the remaining 70 per cent stake in insurance company Esure that founder Peter Wood did not own.

Wood established the business in 2000 in a joint venture with Halifax but he felt it did not work for Lloyds.

The deal marked another move in Lloyds decision to scale down its portfolio of businesses. General insurance is now headed by former Scottish Widows boss Andy Briggs.

The bank is sounding out private equity firms about taking a stake in its integrated finance unit that holds stakes in a number of companies.