Lloyds bank to decide on £10 billion rights issue over next seven days
It is rumoured that Lloyds bank will decide whether or not to go ahead with a proposed £10 billion rights issue by 23 October. Market insiders have suggested the company is coming to a critical point in its refloating and refinancing of the operation, something which will need the go-ahead from the UK government, the Treasury and various financial regulators. This is a very important period for Lloyds bank which continues to suffer and is lagging the general UK banking sector badly.
It is rumoured that the UK government is willing to offer a cash injection of £5 billion, in exchange for additional shares, although the company is also rumoured to be looking for further funding. There had been additional rumours of a potential £25 billion rights issue but this appears to have gone by the wayside and a smaller amount is now under consideration. We should also hear about the UK government's asset protection scheme, and the decision of the Lloyds management to try and break an earlier agreement without a termination fee.
Not only will the next seven days be vital for Lloyds bank, the Lloyds bank share price and Lloyds bank shareholders, but it could well affect the overall UK banking sector.
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