Complete Finance Blog

Decision time is approaching for Lloyds bank shareholders in relation to the companys 13.5 billion rights issue which will be accompanied by a 7.5 billion debt for equity swap. Today sees a massive 240 page booklet falling through the letter boxes of Lloyds Banks 2.8 million shareholders, which has in itself been a very expensive and time-consuming exercise!

As we have mentioned on numerous occasions, the rights issue had been delayed due to regulatory issues and the need for the bank to agree an exit strategy from the asset protection scheme. Now that all of these issues have been resolved the company is now free to raise funds from existing shareholders and appears to have the support of the majority of institutional investors. The UK government has also agreed to take up its entitlement which will see the UK taxpayer’s stake remain at 43%.

Many people now hope this is the final chapter in the resurrection of Lloyds bank which was holed below the waterline by not only the UK recession but the acquisition of HBOS, which many people believe was “forced” upon the company. Almost immediately after the HBOS acquisition we saw an increase in bad debts, debt provisions and a sudden and dramatic reduction in business activity. Lloyds Bank management must now be ruing the day they came across HBOS!

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