Lloyds mulling £15bn cash call

10th Aug 2009 08:18

Lloyds Banking is said to be mulling another huge cash call to reduce the costs of signing up to the government's toxic asset protection scheme (APS).The bank, which is 43% owned by the UK government, has already tapped shareholders a number of times recently, but management is said to be concerned that the cost of taking part in the APS scheme is just too high.The bank agreed to put £260bn of troubled loans into the APS scheme as part of its initial deal in March, but is baulking at the £15.6bn in fees. Talks about the details are still ongoing.Last week, Lloyds said it thought its bad debt write-offs may have peaked, which has led some shareholders to question why it needs to pay the fees at all if it won't need the insurance offered by the government. Reports at the weekend suggested hedge funds have been piling into the Lloyds shares recently hoping to get the deal scuppered or substantially amended. Analysts suggest Lloyds would need close to £15bn to withdraw completely from the APS scheme, though other options to reduce the cost are apparently also under consideration.UK Financial Investments, which controls the government stakes in banks, has said it will not take part in the shareholder vote on the scheme. Lloyds TSB raised £4bn from shareholders earlier this year. HBOS, now part of Lloyds, raised £4bn last June and received £11bn from the government.