Lloyds move to benefit taxpayers
Taxpayers looked set to claw back cash from the Lloyds Banking Group for the first time after the bank's £4 billion fundraising gained strong backing from investors.
Part-nationalised Lloyds - currently 43.4% owned by the taxpayer - is raising cash to replace £4 billion in Government-owned preference shares with ordinary shares.
The move is likely to raise around £2 billion for the bank from other investors to help pay off the Government's preference shares.
These preference shares - issued during last autumn's financial crisis - cost it £480 million in dividend payments every year.
The strong appetite for the fundraising, with 87% of the new shares sold, comes because the stock was on sale at well below the current market price.
If all shareholders had snubbed the move, the taxpayer's stake could have risen to 65%.
City Minister Lord Myners told the BBC Radio 4 Today programme: "I think this is very real progress.
"To imagine, three months ago, that we could have raised primary equity for a major UK bank experiencing the sort of bad debts that Lloyds was announcing is extremely difficult.
"I think we have now moved into a new territory in which institutional investors are saying 'We now have confidence in UK banks, their capital is strong and they are clearly again lending and supporting the UK economy'. So it's good news.
"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."
