Lloyds to get test capital plan ok
Thu Oct 29, 2009 6:55am GMT

LONDON (Reuters) - Chancellor Alistair Darling will allow part-nationalised bank Lloyds to test its capital-raising plans in the market and formally appoint underwriters, the Financial Times said on Thursday.

The bank was not immediately available for comment on the report, which cited an unnamed official close to the talks.

A government source told Reuters: "Discussions with Lloyds are ongoing and no decision has been made."

Lloyds, 43 percent owned by Britain, is considering an exit from a costly government-backed asset-protection scheme to insure 260 billion pounds of the bank's assets against losses from bad debts.

To replace the scheme, Lloyds would need to boost its capital by about 25 billion pounds to win the approval of Britain's financial regulator, industry sources have said.

That would likely include a rights issue of 10-15 billion pounds, sources and analysts have said.

The Financial Times said Darling would tell Lloyds within days that it can formally appoint underwriters and test the market, but would reserve the right to withdraw approval for the plan if he concludes the move is too risky.

Lloyds has lined up six investment banks to run a rights issue if it gets the go ahead, people familiar with the matter have told Reuters.

A key issue would be whether the government would support a massive cashcall, which would require it to spend about 6 billion pounds to prevent dilution of its stake.

Shares in Lloyds fell on Wednesday, hit by fears that this week's break-up of Dutch bancassurer ING was an example for Britain's biggest retail bank, which is facing mounting pressure in its campaign to escape further government control.

The bank is facing a crunch week over its plans to plug a 20-billion-pound hole in its capital before Christmas, with a key decision resting with UK regulators, sources familiar with the situation have told Reuters.

how the intraday chart for the banks is going on today

A spike at the moment from 84p to 86.33p +6.30p

5 days chart

15 minutes delay

......................NEWS ...................

LLOYDS BANKING GROUP
Lloyds Banking Group (Lloyds) notes recent media speculation regarding its
proposed potential participation in the Government Asset Protection Scheme
(GAPS). Lloyds is in advanced discussions with HM Treasury, UK Financial
Investments and the Financial Services Authority regarding alternatives to
participation in GAPS.

Lloyds believes that any alternative proposals to GAPS would be likely to
include a substantial capital raising of core tier 1 and contingent core tier 1
capital to increase the Group's capital ratios to an appropriate level of
strength and flexibility, and would provide a strong capital base for the future
stability and success of the Group. The alternative proposals would also meet
the FSA's requirements for stressed economic conditions.

Capital raising options currently under consideration include a combination of
raising immediately available core tier 1 capital by way of a rights issue and
generating contingent core tier 1 and/or core tier 1 capital through the
exchange of certain existing Group capital securities. The capital raisings
contemplated are expected to be fully underwritten and will be subject to
shareholder approval.

Should Lloyds not enter into GAPS it expects it will be required to pay HM
Treasury a fee in recognition of the value of the implicit guarantee Lloyds has
benefited from since the announcement of its intended participation in GAPS in
March 2009. There can be no certainty at this stage that any alternative to GAPS
will proceed. All options remain open.

Lloyds also notes recent media speculation regarding its discussions with the
European Commission regarding the terms of the restructuring plan to address the
state aid which has been received by the Group. Lloyds confirms that it is in
advanced discussions with the European Commission and further details will be
announced in due course. Based on the discussions to date it is confident that
the final terms of its restructuring plan, including any required divestments of
assets, will not have a material impact on the Group. The Group remains
confident that it will meet its commitment to deliver more than GBP1.5 billion
run-rate synergies and other operating efficiencies by the end of 2011,
notwithstanding the impact of the expected state aid remedies.

The Group continues to trade satisfactorily. It has delivered a robust trading
performance over the last few months and continues to deliver in line with
recent guidance.

              

                     

robust trading performance.........lol

its been on a downtrend for last TEN YEARS!!
it can hardly go any lower or its all over

From FT chat today:
"Put yourself in the role of those pitching for the LLOY/GOVT issue. - Regardless of whether the issue comes at 50p or 40p, & regardless of the size, the advisor could happily illustrate that the 17% lend is vulnreable if a 'coporate action' is called. Consequently that annualized borrow rate of 10bps could become non existent, or at least jump to something absurd & the PB is fully vindicated in changing the terms owing to the 'corporate action' - For the Govt, a wry smile that they hurt some hedge funds, some pleasure in seeing their stake go to 1, for the latter, all round frustration knowing that the issue will still come at 1/2 the current price... - The moral of the malaise is that the risk right here is on the upside. It will trade 80-95p until the terms are announced, so still a good lump of upside to come!"

Current short positions:
"Rbs 1.97% on loan 9.64 days to cover
Lloy 9.24% on loan 23.7 days to cover"

upside to come, lol...........such ramping on a mere 10p or so.....haha

was it you harrycat say this would be 2 quid soon not that long ago?
i know that master idiot was saying this also

Oh no. I never make those kind of predictions! I try & post other (informed???) opinions from reputable sources, but if I mention a resistance/support price it's only from the graph analysis.
Just to put 10-15p upside in perspective though, gives you 12-15%! Not good enough???

Time for action and put that FILTHY COW ( marni ) on her place

       

We knew you were a FILTHY COW ( marni ) but no a FAT one aswell

you never got my good side on the pic

re - you never got my good side on the pic

Glad it is covered

You got on with life and lost a lot of weight since.
We know why.........

what is wrong with the govt? the implied guaranttee has cost nothing so far; Lloy are anxious to gain independence why not let us off the hook, they will get back all the money paid so far to LBG, while lots of luvly tax will begin to flow day after day, week after week, month after month into treasury coffers or am I the only one that thinks screwing the last penny out of the Coy is not the way to return it to independence.

Lloyds nears 20 billion injection
Thu Oct 29, 2009 5:00pm

Lloyds set to sell key parts of its business - report

EU exec to decide on Lloyds overhaul in coming weeks

A Treasury official likewise said talks with Lloyds were continuing and no decisions had been made.

The Treasury has given Lloyds the go-ahead to explore market sentiment and reassure it that private investors are willing to bear the risk of its massive capital addition, two sources familiar with the matter said on Thursday.

"They have been given the go-ahead (to find out) whether they can get it done and underwriters need to explore whether they can deliver," one of the sources said.

"The government is conscious of the risk and if they believe it's too high they won't give them the go-ahead ... the second gets answered by the first," the source said.

The bank has yet to officially mandate the banks it has lined up for the rights issue: UBS (UBSN.VX), Bank of America Merrill Lynch (BAC.N), Citigroup (C.N), Goldman Sachs (GS.N), JP Morgan Cazenove (JPM.N) and HSBC (HSBA.L)(0005.HK).

Markets have been bracing for wild swings in Lloyds's share price, with stock lending -- an often-used indicator for short-selling -- rising sharply this month.

From SKY news...............

The agreement would involve the sale of Lloyds TSB Scotland, Cheltenham & Gloucester (C&G) and Intelligent Finance (IF), it is understood.

This could affect thousands of customers at C&G's 164 branches, Lloyds TSB's 185-strong network, plus internet account holders with IF.

The EU competition watchdog has been scrutinising Lloyds' business to ensure the bank, which was bailed out by the UK government last year, has not gained an unfair advantage over its competitors.

The news follows a Lloyds statement updating the markets on the bank's ongoing attempts to withdraw from the Government's toxic asset insurance scheme.

Sky News City editor Mark Kleinman said: "I understand that Lloyds is close to an agreement with Brussels to sell its Lloyds TSB branch network in Scotland, the Intelligent Finance online banking subsidiary and the Cheltenham & Gloucester branch network.

"In Lloyds' statement, it did not name those particular assets but it has said it does not believe that any potential disposals will have a material affect on the group's finances.

"This will be seen as good news by Lloyds investors as it makes it more likely that Lloyds will be able ultimately to escape the Government's Asset Protection Scheme."

On Wednesday, EU regulators paved the way for part of Northern Rock to be sold off - with the likes of Tesco, Virgin Money and National Australia Bank thought to be interested.

Any sell-off would lead to a major shake-up of high street banking in the UK - but Kleinman said it was too early to say whether there will be job losses.

Kleinman added: "The Government and Brussels are trying to encourage more competition in the UK retail banking sector.

"This means if you carve out Cheltenham & Gloucester, Intelligent Finance and and TSB in Scotland, you've got a potentially powerful competitor that could be taken over by one of the aspiring newcomers in the UK banking market.

"It's too early to say what this will mean to staff and customers given it's not yet a formal agreement between Lloyds and the European Commission."

From the Wall Steet Journal

The Deal to Save Lloyds

BY SIMON NIXON
Nearly there? Lloyds Banking Group has confirmed it is now a whisker away from pulling off a Houdini-like escape from the U.K. government's asset protection scheme. If it succeeds, it will be a triumph of high finance, low politics and the determination of Prime Minister Gordon Brown and Lloyds boss Eric Daniels to avoid unpicking the disastrous takeover of HBOS they agreed at the height of the financial crisis last year.

Key to the Lloyds escape strategy has been an intense rearguard action to prevent the European Union forcing the sale of its Halifax branch network. Without the Halifax ...

What could be left with

Lloyds TSB
A business with 17m personal customers, 2000+ high-street branches, 800,000 business accounts and nearly 70,000 employees.

Halifax and Bank of Scotland

Scottish Widows

Birmingham Midshires

Advisory Sales

Bank of Scotland Investment Service

esure

HBOS Financial Services

Clerical Medical,

Stal

From Reuters update ............

Lloyds finalises $33 bln capital plan, shares jump
29 Oct 2009 - 16:26

By Myles Neligan and Douwe Miedema

LONDON, Oct 29 (Reuters) - Lloyds Banking Group Plc inched closer to plugging a capital gap of more than 20 billion pounds ($33 billion), boosting the British bank's shares on prospects a deal could happen before the year end.

In a sign it is getting more confident, Britain's biggest retail bank said it was in "advanced discussions" with regulators to stay out of a government-backed scheme to insure bad debts, sending its stock up 8 percent.

The bank for the first time confirmed widely reported details of its ambitious plans -- including one of the world's largest-ever rights issues and a debt swap -- to help it avoid harsh European Union anti-trust sanctions.

"The comments today provide comfort that the group will not be broken up and that any restructuring initiatives will not be particularly material to group earnings or capital," said Joe Dickerson, an analyst at brokerage Execution.

The bank is keen to announce its plans to raise capital at the same time as any sanctions it faces from the EU, after the UK scooped up a stake of 43 percent in the bank in last year's bailout, sources close to the situation have said.

Sky News reported that the bank was close to agreeing a deal with the EU to to sell its Cheltenham & Gloucester branch network. The deal would also involve Lloyds TSB Scotland and internet bank Intelligent Finance, Sky said.

Lloyds's comments came as Ireland's finance minister sought to downplay worries about a delay to his 54 billion euro bad bank plan, saying it could still proceed on schedule unless parliament gets bogged down in a lengthy debate. [ID:nLT287293]

Lloyds shares had lost ground this week as the market feared an order from Europe's anti-trust regulators for Dutch bancassurer ING to break up its business after receiving state aid set a harsh precedent for the British bank.

By 1309 GMT, Lloyds stock was up 7 percent at 85.62 pence, outperforming a 3.5 percent rise in the DJ Stoxx European banking sector index < .SX7P> and rebounding from Wednesday's lowest close in more than three months.


FINAL DETAILS

Lloyds hopes to launch its plans next week, if it gets approval, Reuters reported last week, quoting sources close to the situation. That would enable it to raise the money before Christmas, its preferred time schedule. [ID:nLN139980]

On Thursday, sources familiar with the matter gave new details of Lloyd's campaign to stay out of the APS.

It has lined up a mandatory convertible bond of 2 billion pounds and a series of actions agreed with the Financial Services Authority, they said, such as cost cuts and a reduction of risk-weighted assets.

It also plans a rights issue of 12 billion pounds and contingent capital -- "top up" hybrid capital that changes into equity if the bank hits trouble -- of 7 billion pounds, bringing the total to well over 21 billion pounds.

Lloyds declined to comment.

The bank has yet to receive the green light from regulators to stay out of the APS plan and absorb any further losses on toxic assets without state aid. It said in March it wanted to insure 260 billion pounds worth of assets under the scheme.

"There can be no certainty at this stage that any alternative to (the government insurance scheme) will proceed. All options remain open," Lloyds said.

A Treasury official likewise said talks with Lloyds were continuing and no decisions had been made.

The Treasury has given Lloyds the go-ahead to explore market sentiment and reassure it that private investors are willing to bear the risk of its massive capital addition, two sources familiar with the matter said on Thursday.