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Lloyds bank concerned about fundraising

Lloyds bank will next week meet up with institutional investors and the UK government in a bid to see whether there is still appetite amongst investors for a £25 billion capital raising program. The company is expected to raise around £11 billion via a rights issue and a further £14 billion in loan capital which will be used to refinance the balance sheet. However, the share price has fallen significantly over the last couple of weeks and the company is now concerned about investor appetite for a large fundraising.

There is also concern that the EU will rule against Lloyds bank and force the company to dispose of a large number of branches and other operations as a balancing act against significant state funding. While nothing has been confirmed or denied by the EU at this moment in time, many investors are now starting to presume the worst after the damning ruling against ING last week.

We keep assuming that the Lloyds bank fundraising issue will be sorted out in the short to medium term but this has now dragged on for a number of weeks and is in danger of running out of time. Quite how the company can refloat the share price from the current level is a difficult question to answer.

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