Lloyds to pay £2.5bn to escape APS


According to press reports this evening, banking giant Lloyds is to pay the Government a fee of £2.5 billion to avoid the Government’s Asset Protection Scheme (APS).

For some time now, there have been reports that Lloyds Banking Group has been exploring ways to avoid the scheme, which insures against losses arising from toxic assets.

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.

The megabank, which is currently 43% owned by the taxpayer, wants to avoid having to participate in the scheme because it will be even more heavily under state control.

One of the options the bank is exploring is tapping shareholders for cash, reported to be around £13 billion - if it goes it ahead, it would be one of the biggest ever rights issue in UK corporate history.

Lloyds has been struggling since it acquired HBOS last autumn - at the height of the financial crisis.

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