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Lloyds bank to issue 3.1 billion shares next week

In a move which will dilute the stake which UK taxpayers hold in Lloyds bank, from 43% to 41%, the company has announced plans to issue 3.1 billion shares next week. The shares will be issued at 48.7p to bondholders to coincide with the final phase of the company's balance sheet reorganisation which has been ongoing for some time.

The prospect of over 3 billion shares "hitting the market" next week saw Lloyds bank shares marked down by around 3% but in truth the markets is more concerned about the problems in the Eurozone. Slowly but surely we are seeing the reorganisation of the Lloyds bank balance sheet come together in what should inevitably allow the company to form a firm base from which to grow in the future.

In all honesty the issue of the 3 billion shares was fully expected and was detailed some time ago but with investors currently spooked by the Greek economic collapse and problems in Portugal and Spain, investor sentiment has taken a big hit. It will be interesting to see how the share price reacts next week when the new shares are issued and whether indeed former bondholders will decide to sell up and cash in their chips.

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