Treasury to recoup cash via Lloyds share placing
LLOYDS Banking Group will effectively pay the Treasury back £2.3bn of the state aid it has received today, making it the first government-recapitalised British bank to repay part of its loan.
The taxpayer will recoup the money as part of Lloyds £4bn share placing, aimed at repaying the £4bn in preference shares it issued to the Treasury. This makes the UK government the first in the world to retrieve cash used to stop banking collapse.
The government, which owns more than 43 per cent of Lloyds, has promised to take up its full allocation of new equity, equating to £1.7bn, meaning that the remaining £2.3bn will be raised from other investors and directed back into the Treasury’s coffers.
That will only happen if investors take up all the new shares, but there should be a good appetite. The new shares are priced at 38.43p, a 58 per cent discount on Friday’s closing price of 66.2p.
But with Lloyds’ stock still languishing far below the 115p per share price at which the Treasury bought its stake – managed by UK Financial Investments – the taxpayer is still facing a paper loss of around £3.5bn on its ordinary equity.