Lloyds raises £4bn as repayment to Treasury begins
Shareholders take up 87 per cent of rights issue but Treasury stake is maintained at 43 per cent
Tuesday 09 June 2009
Lloyds Banking Group is the first bank in Europe to return "significant" bailout cash to taxpayers after it successfully raised £4bn from shareholders. The beleaguered group yesterday announced that shareholders had taken up 87 per cent of the heavily discounted rights issue, with the rest sold into the market.
Eric Daniels, the group chief executive of Lloyds, thanked investors for supporting the issue, adding that the directors had taken up their entitlement in full. The deadline to pick the rights of 34p a share passed on Friday, when the shares closed at almost double that.
Lloyds is to use the sum raised to buy the Government's preference shares and cancel them. The move will save the bank £480m in dividend payments a year, and remove the dividend block imposed on Lloyds.
In March, Lloyds Banking Group put £260bn of assets into the Government's asset protection scheme. One condition was the agreement to replace all of the preference shares with ordinary shares.
The Treasury also took up its full rights in the issue, it emerged yesterday, which sees its stake in Lloyds remain at 43 per cent, and means the total paid back by the bank is only £2.6bn.
A spokesman for Lloyds said that beyond some smaller repayments to the Government from Northern Rock "this is the first significant return of capital to a government. It is a step in the right direction".
The bookrunners Citi, JP Morgan Cazenove and UBS placed the remaining 13 per cent in the market yesterday morning at 60p per share. The proceeds from the sale will be split between the shareholders who did not pick up their rights. The average shareholder will receive a cheque for about £73, minus expenses, in the post over the next few weeks.
The Government invested £17bn in the reeling Lloyds last October to prevent its collapse in the wake of its disastrous takeover of HBOS. The Treasury also underwrote the rights issue, which left it liable to pick up any shares left unsold. If investors had completely shunned it, the Government's stake, managed by its UK Financial Investments arm, would have risen to 65 per cent.
The combined group is preparing for a full-year loss after it revealed that writedowns on bad corporate loans was set to rise by half to £14bn. The losses are principally linked to HBOS's portfolio. Shortly afterwards, the chairman, Sir Victor Blank, bowed to shareholder anger over the deal and announced he would not stand for re-election when his term expires next year. Mr Daniels appears to be safe as he sets about engineering the full integration of the two groups.
"The focus of our management team continues to be on ensuring a successful integration and delivering significant benefits for our shareholders in the medium to longer term," he said.
Separately, Barclays yesterday confirmed it had received more offers for its exchange traded fund business iShares, as well as the asset management arm, BGI, as a whole. It confirmed discussions with the asset manager BlackRock, adding that they were ongoing. This comes after the group announced it was to sell iShares to CVC Capital Partners for $4.4bn in April.
A spokesman for Lloyds said; "If and when we have an announcement to make, first and foremost we brief our colleagues. We will then speak to our external stakeholders.
"Cheltenham & Gloucester is an important and valuable brand for our company and it will remain so."
The Lloyds Group has around 3,000 branches across the UK with its main brands Lloyds TSB, Halifax and Bank of Scotland.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...