Lloyds Banking Group announces plans to raise £4bn
Lloyds Banking Group is to embark on a £4 billion fundraising exercise which follows the news that chairman Sir Victor Blank is to step down in June 2010.
The £4 billion fundraising comes amid high profile changes at the bank and sees chief executive Eric Daniels’ position ‘in doubt‘.
Both directors have faced criticism from shareholders following the hasty takeover of HBOS last year, which left the group 43% state-owned.
Meanwhile, shares in Lloyds gained 5.4% to 94p in afternoon trading today after the bank invited shareholders to take part in the placing by offering 0.6213 shares at 38.43p for each share owned.
This represents a significant discount of 57% on last Friday’s closing price of 89.2p.
The fundraising will see the bank will exchange £4 billion of preference shares held by the Government in the bank for equity. If the plan is successful, it will also reduce costs as the Treasury currently receives £480 million a year on the preference shares.
With almost 3 million private investors, Lloyds has the largest shareholder base in Britain, who collectively own just under 10% of the bank.
Non-executive director, Lord Leitch, has been appointed deputy chairman.