Lloyds bank set to raise an additional £4 billion
It has been revealed that Lloyds bank will be raising a further £4 billion via the sale of new shares to existing shareholders. The move, which took some analysts by surprise, will see a further injection of capital into the bank's coffers and offer the opportunity to payback preference shares which are demanding nearly £500 million in dividends each year. However, there is concern as to whether existing shareholders will be in a position where they would be willing to invest more money to a company which has seen a dramatic fall of late.
Interestingly, the whole share issue has been underwritten by the UK Treasury which means if existing shareholders snub the issue of the new offer of shares, even though they will be offered at a discount to the current share price, the authorities would be obliged to take up all shares left over. This could increase the government's stake from 43.4% to a significant 65% although looking to the longer term the bank would have a far stronger balance sheet and be better prepared for the good times when they finally arrive.
Whether this is the first of a number of similar operations in the UK banking sector remains to be seen as many analysts had expressed concern that Barclays bank had not taken advantage of the recent rise in its share price to raise more funds.
Share this..
Related stories
Price Of A Pint Set To Rise
Despite seeing the cost of living continue to power ahead there are now concerns about yet another rise in the price of the humble pint. It seems that even after a hard days work it is going to cost us all a little more to unwind. The news of the proposed rise has been released by SABMiller and is sure to be followed by rivals as raw material costs continue to move higher. While SABMillerâ...
Read MoreEmerging economies 'catching US'
The economies of emerging nations are gaining ground on the US in terms of competitiveness, a new report has stated.Today's annual study from business thinktank IMD says the world economy has "never been as dynamic", with none of the 55 economies in its World Competitiveness Yearbook in recession.But the Lausanne-based organisation warns that the growth in developing economies could force the US a...
Read MoreHas the threat of deflation disappeared?
As more and more experts in the field of economics continue to discuss the threat of deflation in the UK there was some good news today when inflation fell by less than expected, from 4.1% to 3.1% against expectations of a fall to 2.7%. While it may seem strange that a less than expected fall in the rate of inflation has been well received, the threat of deflation is more serious at this stage of...
Read MoreBank of England MPC set to maintain base rate at 0.5%
January's meeting of the Bank of England MPC is widely expected to see little change in the current policy with base rates set to remain at 0.5% and the quantitative easing program unchanged at £200 billion. However, there is a feeling that February could well be a crunch meeting for the MPC with a suggestion that inflation is starting to come to life, the manufacturing industry is improving but...
Read MoreUK government to tackle benefit cheats
The UK government believes that in excess of £5 billion a year is milked from the UK benefit system by fraud and benefit cheats. As a consequence, the UK government is set to introduce credit rating agencies and private surveillance companies to monitor potential fraud in the system. When you consider the amount of money at stake there are few who can really complain at the UK government's attemp...
Read More