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Analysts give a cautious welcome to Lloyds bank rights issue

Analysts in the UK have given a cautious welcome to the Lloyds bank rights issue which at £13.5 billion is the largest in UK stock market history. The vast majority of analysts are advising shareholders to take professional advice regarding the situation and their specific circumstances although ultimately the £13.5 billion in question has been underwritten and will be available to Lloyds bank whatever the take-up is amongst existing shareholders.

The rights issue itself does not come as any shock to investors in the UK because it has been the subject of intense speculation since it was first mooted some weeks ago. The company had a number of regulatory and legal hoops to jump through before it was able to confirm the final make-up of the fundraising which will also bring in a further £8 billion-£9 billion via a bond exchange program. This should be more than enough to replenish the weakened Lloyds bank balance sheet and allow the company to escape the clutches of the UK government's asset protection scheme.

However, analysts believe that the short-term performance of the Lloyds bank share price is still very difficult to predict and when you throw in the ongoing difficulties in the wider UK economy it is easy to see why they have come to this conclusion. Professional financial advice should be taken before any investment decisions are taken.

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