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Lloyds continues to explore ways to escape APS

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by Kay Mitchell
”Lloyds

Lloyds Banking Group is reported to be embarking on a massive fundraising scheme, in order to repair its balance sheet which was battered following the takeover of rival HBOS, as well as avoiding participating in the Government’s Asset Protection Scheme (APS) .

The bank, which is 43% owned by the taxpayer, is understood to be mulling over a £12 billion rights issue – which would be one of the biggest ever rights issue in UK corporate history.

A further £11 billion will be raised through the issue of new loans to replace existing borrowings, according to reports.

The banking giant is looking at ways to avoid participating in the APS and one of the options is to tap investors for cash.

The APS insures against losses arising from toxic assets and Lloyds enrolled in the scheme in March and planned to put £260 billion of loans and investments into the scheme in return for taxpayers getting a larger stake in the group.

However, the bank has been reconsidering its participation since it doesn’t want the taxpayer’s stake to rise any further.

In related news, last week Lloyds announced it had sold some of its private client funds to Rathbone Brothers after concluding that they were “no longer core” for the bank.

The bank said approximately 6,000 customers with funds totalling £1.27 billion will transfer to Rathbone Brothers. If all of the funds are transferred, the total price payable to Lloyds would be £35.4 million.

The announcement comes just a week after the bank confirmed the sale of its Halifax estate agency business to LSL Property Services for £1.

The sale of the estate agency business put 460 jobs at risk – including 360 full time positions.

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News posted: October 25, 2009

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