LLOYDS Banking Group has launched plans to raise £4bn from investors.
The partially-nationalised bank wants to raise the funds to convert the £4bn in preference shares owned by the Government into ordinary shares.
The taxpayer currently owns 43.4% of the bank, but if all other shareholders snub the issue, it could end up owning 65%.
The announcement comes after the bank said Sir Victor Blank would retire as chairman by June next year – amid mounting pressure after losses from its rescue takeover of struggling HBOS last year. HBOS tabled a deficit of £11bn.
Shares in Lloyds rose by 8.75p a share to 98p as investors welcomed news of Sir Victor's departure.
The bank’s fundraising plan, if successful, will also allow Lloyds to save itself £480m a year in dividend payments on the preference shares owned by the Treasury.
Previous share offers by banks needing Government support have been snubbed by investors because the price has been well above the market value.
But this latest move is likely to receive more support because the shares are being offered at 38.43p, a discount of almost 60% to the current share price.
Lloyds has about 2.8m private shareholders, who together own just under 10% of the total.
The average Lloyds investor with 550 shares would have to spend about £130 to take up the new shares, a spokesman said.
Under the terms of the deal, any shares not taken up by investors will be sold in the market and any profits above the offer price will split among investors who did not take part.
Lloyds said that talks continued with the Government over its plans to place £260bn in toxic assets – mostly inherited from HBOS – into a taxpayer-backed insurance scheme. Talks are expected to be concluded in the “next few months”.
