Lloyds faces heavy fees for bailout

Lloyds Banking Group may have to pay hundreds of millions of pounds in fees to satisfy EU regulators if it manages to escape the Government's asset protection scheme.

The bank confirmed yesterday that it was actively looking at a rights issue, combined with "the exchange of certain group capital securities", with that aim in mind. However, it refused to put a figure on the cash call – which has been estimated at anything between £10bn and £25bn. The Government, which holds just over 43 per cent of Lloyds shares, will take up its rights to maintain its stake.

That means the taxpayer could end up putting in as much as £12bn more, although £8bn is a more likely figure.

The penalty fee compensates for the "implicit guarantee" enjoyed by Lloyds because of the Government's scheme. Lloyds also faces having to sell assets as a result of the state bailout. But it said it could still meet its target of £1.5bn of savings resulting from the merger of Lloyds TSB and HBoS, and said the disposal plan being talked of was "not material to the group".

Speculation has centred on a sell-off involving its Cheltenham & Gloucester mortgage subsidiary, together with Lloyds TSB Scotland and the Intelligent Finance business. That would suggest that the EU is taking a far easier line on Lloyds than with ING, which was forced to split.