How much will Lloyds bank look to raise in any fundraising?
There is further confusion today in the city with a comment from Credit Suisse stockbrokers regarding the worst kept secret in the city, the forthcoming Lloyds bank fundraising. Despite initial indications that up to £10 billion will be raised to cover the company's fees for joining the UK government's asset protection scheme, which will effectively ring fence possible liabilities from £260 billion worth of loans, Credit Suisse believes this figure could be nearer £6 billion. So what is going on?
The difference in opinion regarding the potential fundraising figures centre upon an assumption that the company will half the amount of assets it places into the asset protection scheme from £260 billion to £130 billion. This would significantly reduce the fees associated with the plan and the £6 billion figure should in theory at least cover the premiums. This would mean that the company does not need to issue further shares to the UK government which would likely have taken it over the 50% shareholding level.
However, until we actually see the paperwork and the figures from Lloyds bank nobody really has a clue what is going on. Indeed, if the company does not receive support from institutional shareholders regarding the share issue it may well be forced to go back to the UK government and issue new shares.
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