Lloyds Bank shareholders back rights issue

The Lloyds Bank rights issue was strongly backed by shareholders with 87% of the shares taken up by the close of the offer last Friday.

The remaining 13% of the issue were placed in the market today.

Lloyds shares are currently trading at just over 60p, compared to the discounted price of 38.43p they were offered at.

This means those shareholders who took up the offer have an immediate profit of around 22p per share.

Lloyds bank will now be able to make a repayment to the Government of over £2 billion, sooner than expected.

Graham Spooner, investment adviser at The Share Centre, commented ‘The good news for shareholders is that the success of the fundraising should mean that Lloyds should be in a position to start paying dividends again. After all, the offer was intended to raise cash ro replace the £4bn in government-owned preference shares with ordinary shares. And, the redemption of preference shares should now help to reduce Lloyds’ annual interest bill by £480 million.’

Spooner added ‘Despite the succesful offer, the future at Lloyds is still uncertain in the short-term; Lloyd’s decision to buy HBOS last year has undoubtedly hindered the bank’s progress’ although he hoped the ‘new and enlarged group will benefit from its viability on the high street and offer some long-term value for investors.’

Investors should of course make their own judgements on buying or selling shares and if in doubt seek independent financial advice.