Lloyds Banking Group Seeking Help from Other Banks

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Lloyds Banking Group Seeking Help from Other Banks

Wed, 14 Oct 2009

Lloyds Banking Group is reportedly seeking the help of fellow investment banks as it aims to raise £25 billion without the asset protection scheme . The bank, which is 43 per cent owned by the taxpayer following its troublesome takeover of HBOS last year, is not believed to have issued a formal mandate to any banks, though sources close to Lloyds have commented that the bank is seeking support from other banks.

UBS and Bank of America Merrill Lynch are reportedly willing to act as lead underwriters on any share issue, with Cazenove, Citigroup, Goldman Sachs, HSBC and JP Morgan acting as joint underwriters. The investment banks stand to make £300 million in fees, though any deal depends on a long awaited decision from banking regulators as to whether Lloyds can avoid the asset protection scheme.

In order to raise the necessary funds, reports suggest Lloyds will perform a cash call of £10 billion, convert £7 billion of preference shares into ordinary shares and sell of some of its assets. The strategy could be a risky one for the investment banks, as HBOS's rights issue last July required underwriters to buy £3.8 billion of the £4 billion new shares issued.

Problems persist in the banking industry, with Dutch consumers making a run of savings withdrawals from Dutch bank DSB. The bank is now under the control of the Dutch central bank.

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