Lloyds mulls capital raising plans

29th Oct 2009 11:06

Lloyds Banking has confirmed that it is in advanced discussions with UK authorities regarding alternatives to entering the state insurance scheme for toxic debt.The part-nationalised lender is considering raising cash via a rights issue and debt swap as an alternative to participating in the Government Asset Protection Scheme (GAPS).Any cash call is expected to be fully underwritten, it added.Press reports today claim that Lloyds is looking to raise around £25bn. The group stressed that all options remain open.Lloyds also announced that it is in advanced discussions with the European Commission regarding the terms of a restructuring plan to address the state aid which has been received by the group.The European Commission yesterday approved plans to break up Northern Rock into a 'good' and a 'bad bank', fuelling rumours that Lloyds and Royal Bank of Scotland will also be broken up.Based on the discussions to date, Lloyds said 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 £1.5bn run-rate synergies and other operating efficiencies by the end of 2011, notwithstanding the impact of the expected state aid remedies,' it said.'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.'