Lloyds prepares to repay government debt
by Gill Montia
Story link: Lloyds prepares to repay government debt
After a successful fundraising, Lloyds Banking Group is preparing to return around £2 billion of bailout capital to the Treasury.
The group became 43% state-owned when the ill-fated takeover of HBOS by Lloyds TSB required a £17 billion injection of taxpayer cash to keep the merged entity afloat.
However, last month Lloyds announced plans to raise £4 billion from existing investors by converting the £4 billion in preference shares held by the Government into ordinary shares.
The move provides an opportunity for the bank to make cost savings, as the preference shares demanded a return of £480 million per annum.
Eighty-seven per cent of the new stock has now been sold; the Government has retained its holding in the bank but around £1.7 billion is estimated to have been raised from other investors.
The remaining 13% of shares will be sold into the market, with any profit raised shared among investors who did not take part in the fundraising.
Speaking on BBC Radio 4’s Today programme, Financial Services Secretary, Lord Myners, has described the news as “very real progress”.