Lloyds Banking Group has today embarked on the biggest rights issue on record by asking shareholders to buy 1.34 new Lloyds shares for each one they already own.
The rights issue price of 37p is slightly higher than expected but still heavily discounted at 59.5% on Monday’s closing price of 91.47p.
According to Lloyds, the average retail shareholder would pay £366.7 to take up their rights.
The cash call is the second and final stage of a total £22.5 billion fundraising exercise, which will see the bank escape the Government’s Asset Protection Scheme (APS), which insures against losses arising from toxic assets.
Lloyds is to pay the Government a fee of £2.5 billion in order to avoid the scheme. 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.
Shareholders will meet on Thursday in Birmingham to vote on the new plan.
In related news, yesterday the bank announced 570 life, pensions and investments administration jobs will be eliminated from its Aylesbury offices.
Furthermore, Equitable Life has given notice that its contract with Lloyds for administrative services will come to an end in March 2011, putting a further 340 jobs at risk.
The announcement came just two weeks after the bank said it would axe 5,000 jobs by the end of 2010 - these were in addition to the 10,000 already axed this year.
Lloyds has been struggling since it acquired HBOS last autumn - at the height of the financial crisis.
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