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The fees continue to mount for Lloyds bank

It has been revealed that a potential £10 billion rights issue from Lloyds bank would generate in excess of £300 million in fees for those banking institutions involved in the deal. When you also add in the potential £1 billion break free which the UK government is looking to charge Lloyds bank for leaving the toxic asset protection scheme, the fees are certainly starting to mount up for Lloyds bank.

The longer the controversy regarding a potential rights issue continues the more uncertain and unsettled investors will become. Why is the company taking so long to announce the deal? Are there any problems behind the scenes?

While these may in effect be non-questions, in that there are no problems or concerns behind the scenes, the silence from Lloyds bank is deafening for many investors. If there is one issue which will unsettle investors and researchers it is uncertainty. Investors and researchers would prefer to know the bad news and the good news because effectively they can value the shares on this information rather than guess about what is going on behind the scenes.

The main problem for Lloyds bank is the number of government departments and regulators involved in the issue at the moment. We have the UK government as a majority shareholder, we have the FSA heavily involved in various liquidity tests and we have the Bank of England concerned about the strength of the UK banking sector.

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