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Lloyds bank confirms 95% take-up of rights issue shares

Lloyds bank has today confirmed that 95% of the new shares on offer in the £13.5 billion record-breaking rights issue have been taken up by existing shareholders. This leaves a relatively small amount of shares to be placed with institutional shareholders and allows the company to move on to stage two of its financial restructuring which will see a further £9 billion injection for the company's balance sheet. So what does this mean for Lloyds in the longer term?

The main reason for the rights issue and fundraising was to allow the company to look ahead with a stronger balance sheet rather than to look back at mistakes of the past. There is no doubt that the acquisition of HBOS has been a disaster from day one but now the company is undergoing a significant revamp of its balance sheet, jettisoning a number of peripheral operations and focusing once again upon the core UK banking operation. This should allow the company to retrench and re-define itself in the future as the UK banking arena will be a very different animal after the recession compared to the one which entered the recession.

In many ways, due to the large discount on the price of the new shares compared to the price of the ordinary shares, many investors believed there was no other option but to take up their entitlement.

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