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Will Lloyds bank get the go-ahead from the UK regulator?

While there has been no official confirmation from Lloyds bank regarding rumours of a £25 billion rights issue, it is apparently common knowledge in the city that the company has been doing the rounds with various institutional investors. However, no matter how much hard work Eric Daniels, the new chief executive of Lloyds bank, puts in over the next few days he is ultimately at the beck and call of the UK regulator.

Without the go-ahead from the Financial Services Authority (FSA) there is no way that Lloyds bank will be released from an earlier commitment to join the government's asset protection scheme. Only a few weeks ago there were rumours of stress tests regarding the company's potential withdrawal from the scheme, with those "in the know" suggesting the company had failed. Whether or not the FSA gives the go-ahead to Lloyds bank remains to be seen but ultimately the UK banking sector is nowhere near out of the woods yet and further fundraisings will be required by more than just Lloyds bank.

The rumours of a potential fundraising by Lloyds bank started some weeks ago although they should come to a head next week when the company will be under more and more pressure to announce future plans.

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