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Lloyds Banking: Govt won't underwrite offer PDF Print E-mail
Written by Gary Howes   
Thursday, 15 October 2009 09:03
However as majority shareholder they will be expected to participate in the uptake.



Lloyds Banking Group (LON:LLOY) will have to go forward with its planned rights offer without any state backed guarantees.

Yesterday Chancellor Alistair Darling made it clear that the state would not underwrite the planned Lloyds Banking Group share offer.

As the largest shareholder of Lloyds Banking Group commentators have argued that the state should in fact insure the deal.

If the Treasury had underwritten Lloyds Banking’s giant share issue the state would take up its shares and also pick up a fee of £300m that would otherwise go to City banks and be paid out in bonuses.

The Treasurey is however expected to participate in the issue, as are all existing shareholders.

However even this is yet to be guaranteed by Alistair Darling.

Consensus is that Lloyds Banking Group is looking to earn £15bn from the share offer in order to escape the costly Government Asset Protection Scheme (GAPS), some commentators have raised fears that such a massive shareholding will flood the market.

This will be the largest rights offer in the history of the London Stock Exchange.

Public opinion is however likely to be pitted against any further government uptake of Lloyds Banking Shareholding.

Simplistic reporting by the likes of the Guardian and other media sources will likely stir the pot against further involvement if the scheme continues to be portrayed as a black hole.


Last Updated ( Thursday, 15 October 2009 09:06 )