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£2billion pay out
Strong investor backing for the Lloyds Banking Group has proved successful for the tax payer after the bank began a fund raising exercise to raise cash to replace £4billion in Government owned preference shares with ordinary shares.
It is thought the move will raise £2billion and help to pay off the Government. The shares were issued last year and cost the bank £480milliom in dividend payments annually, almost 90 per cent of the new shares have been sold with the stock sold at below the current price.
There is a remainder of around 13 per cent of shares left to be sold, if these remain unsold the Treasury will by them and the amount added to the stake which the public holds at Lloyds.
It is not all good news for the banking group. Lloyds will still be in the red this year due to its rescue package for HBOS last autumn, at the height of the financial down turn, it will have to right down a further £260billion in toxic debts. Lord Myners said “I think this is very real progress. I think there is still a great deal to be done. The world economy is still in a very nervous condition, but there are some signs in areas traditionally regarded as leading indicators that the underlying economy is moving to a position where improvement can be envisaged
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