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Lloyds bank to ask investors for £5 billion

Lloyds bank has today confirmed it is looking towards a £5 billion fundraising which would allow the company to pay off its premium for the government's asset protection scheme and rebuild the balance sheet for the future. This is the first piece in the jigsaw of the new look Lloyds bank which will hopefully have a stronger balance sheet and better prospects for the long-term. So what next?

There are a number of catches with regards to the proposed Lloyds bank fundraising, which will be part of an overall potential £20 billion fundraising, in that the UK government will need to give its blessing due to the fact that it holds more than 40% of the company. There is also the fact that the government needs to confirm that Lloyds bank will not be held by its earlier agreement to join the asset protection scheme, although this will cost the bank, with a one-off premium likely to be required.

Just when investors started to think they were approaching the end game with regards to Lloyds Bank, something else seems to crop up and the situation is this evening even murkier than it was a few months ago!

It will be interesting to see how the UK government responds over the next few days and whether other investors will follow suit.

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